P, L QI QLI = illegal curve, L = legalRegulations on prostitution: Test DTDs for sellers/buyers Age minimum Sellers must be licensed & inspections Require condom use Zoning laws Protection for sellersConsequences of prostitution: Price goes down, quantity goes up STDs would go down from the status quo Violence against women would go down GDP would go up Increase in employment More tax revenue Increase in the demand for condoms and other related complement goods Cultural shiftSupply of prostitutes is elastic because if one goes to prison, men could just get another one.The goal of illegalizing prostitution is to reduce the quantity. We can reduce quantity by reducing either the supply or the demand. Government uses policies to try to reduce supply (prostitutes). Policies the government uses to keep women from becoming prostitutes: increasing education, increasing police force, greater penalties if caught, more job opportunities, counseling. Policies the gov. uses to lower demand: increased probability of getting caught, greater penalties, and education.Actually more effective to reduce the demand than the supply. Need to go after the buyers. The demand curve is so inelastic that shifting the supply doesn't significantly affect anything. Professor says make selling legal, but buying illegal.Demand creates supply, generally not vice versa. Prostitution is an inferior good. Lifestyle of buyers is hardly affected. Lifestyle for sellers is generally very
View Full Document