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Do you want to read the rest of this article? We use cookies to make interactions with our website easy and meaningful, to better understand the use of our services, and to tailor advertising. For further information, including about cookie settings, please read our Cookie Policy. By continuing to use this site, you consent to the use of cookies. We value your privacy. Prostitution is a multi-billion dollar, globally distributed, low-concentration service industry that is receiving increasing attention in the economics literature.
This article focuses on a widespread, but little studied, feature of this environment-the role of intermediaries pimps or brothel owners on market outcomes. Prostitution laws and markets are perhaps unique in that transactions between principals prostitutes and johns are legal in many countries, while intermediary activity pimping is illegal. After surveying the varying cross-country legality of agents we develop a simple theoretical model to analyze how the presence or absence of intermediaries shifts the distribution of market surplus.
We show that eliminating pimps and brothels may shift surplus in non-obvious ways, depending on the precise function they perform and on whether equilibrium is pooling or separating across "high quality" and "low quality" market segments.
The implications of alternative policy regimes intermediaries legal or illegal are considered. Academic research has focused on the functioning of this particular market, e. Policy-makers' interest has largely been driven by public health concerns. A broad strand of this literature focuses on price determination in the sex market.
