Research Handbooks in Law and Economics series
Edited by Lloyd R. Cohen and Joshua D. Wright
Chapter 10: Prostitution, Technology, and the Law: New Data and Directions
* Scott Cunningham and Todd D. Kendall 1 INTRODUCTION While variously encouraged, sanctioned, prohibited, and taxed in different societies under different legal and regulatory systems, prostitution has continuously played an important role in family phenomena for most of human history. For men, prostitutes may be either economic substitutes or complements for wives in consumption (Posner, 1992), and their availability can also affect wives’ position in pre- and post-marital bargaining (Garofalo, 2002). For women, prostitution is a substitute for marriage in production (Edlund and Korn, 2002), and its prevalence can thus affect the rate of family formation and out-ofwedlock childbirth. For society, prostitution potentially has substantial externalities, and in most societies, laws have imposed various regulations on transactions between prostitutes, customers, and others involved in the industry.1 Despite the importance of the phenomenon, economic analysis of sex work is in its infancy. There have been some theoretical advances, but a fuller understanding of the phenomenon of prostitution has been stymied by a dearth of systematic data collection. Moreover, the extant empirical literature on the economics of prostitution has primarily focused on either developing countries or, in some cases, outdoor (e.g., streetwalking) prostitution in first-world nations.2 Our focus in this chapter is on modern prostitution, the institutions of which have changed substantially in the last decade due to the introduction of modern technology, including mobile telephones and the Internet. These technologies have facilitated a substantial indoor market for sex in developed countries, in which customers search online for prostitutes, who in turn screen...