Economics of SexEconomics of Sex

Reviewed by Robert NoetzelReviewed by Robert Noetzel

Reviewing the Book: Sex, Reviewing the Book: Sex, Drugs and EconomicsDrugs and Economics

This is a review of the first This is a review of the first chapter entitled, Sex: Can You chapter entitled, Sex: Can You Have Too Much of a Good Have Too Much of a Good Thing?Thing?

Written by Diane CoyleWritten by Diane Coyle This look is and unconventional This look is and unconventional

way of looking at certain way of looking at certain industries in the worldindustries in the world

What Diane Coyle says about What Diane Coyle says about the Sex Industrythe Sex Industry Pornography is the biggest success Pornography is the biggest success

story on the Internetstory on the Internet The Internet has made it cheaper, The Internet has made it cheaper,

easier and less frightening to easier and less frightening to become a sex industry entrepreneurbecome a sex industry entrepreneur

It has also made it easier, cheaper, It has also made it easier, cheaper, and less embarrassing to buy and less embarrassing to buy pornography.pornography.

But why are the profits so large?But why are the profits so large?

Economics of the Sex Economics of the Sex Industry: Supply SideIndustry: Supply Side In cases where In cases where

certain things are certain things are illegalillegal This restricts This restricts

supply supply Boosts criminal Boosts criminal

activityactivity Leading to huge Leading to huge

profitsprofits

In cases where In cases where pornography is pornography is illegalillegal The sex market is The sex market is

not like markets for not like markets for other goodsother goods

There is not a There is not a shortage of skilled shortage of skilled workers, unlikely workers, unlikely leading to higher leading to higher wageswages

But how do women But how do women make a larger make a larger income?income?

Deeper Look into the Supply Deeper Look into the Supply Side of Legal PornographySide of Legal Pornography

There is inelastic supply of labor There is inelastic supply of labor because of social inhibitions because of social inhibitions attached to the fieldattached to the field The labor supply is not responsive The labor supply is not responsive

to payto pay A career does not last longA career does not last long

High earnings for a relatively short High earnings for a relatively short periodperiod

The Demand Side of Legal The Demand Side of Legal Pornography: Why People Pay as Pornography: Why People Pay as Much as They DoMuch as They Do Product DifferentiationProduct Differentiation Consumers’ desire for privacy, Consumers’ desire for privacy,

prevents price comparison, prevents price comparison, unlike normal competitive unlike normal competitive marketsmarkets

Individuals’ differing tastesIndividuals’ differing tastes

This all leads to monopolistically This all leads to monopolistically competitive markets. competitive markets.

My ReflectionMy Reflection

There are only a certain number of women There are only a certain number of women that are willing to be in the sex industrythat are willing to be in the sex industry

Out of this number, there are only a certain Out of this number, there are only a certain of women that are accepted in be in the of women that are accepted in be in the sex industrysex industry

While there isn’t a shortage of skilled While there isn’t a shortage of skilled workers, there are certain women that are workers, there are certain women that are more highly demanded then others, raise more highly demanded then others, raise their wagestheir wages

High cost to the consumer is incurred by High cost to the consumer is incurred by the high cost of the wages and the fact that the high cost of the wages and the fact that it is a monopolistically competitive market, it is a monopolistically competitive market, different tastes for different people.different tastes for different people.