UNIVERSITY OF PERADENIYA
Market Demand and Supply Curve and Price
Determination in the Prostitution Market
Name Thevuni Kotigala
University University of Peradeniya, Sri Lanka
Faculty Faculty of Arts
Programme Masters in Development Practice (MDP)
Course Year 2020/21
Academic Year Pre-MDP
Lecturer Prof. N.D. Samarawickrama
Department Department of Economics & Statistics
Subject Code DPR 403
Subject Name Principles of Economics
Medium English
Market Demand and Supply Curve and Price Determination in the
Topic
Prostitution Market
Word Count 1,038 words
, Study of Economics can be illustrated as the social science that studies the production, distribution,
and consumption of goods and services. Thus, it is understood that Economics also focuses on the
behavior and interactions of economic agents and how economies work. Thereby, the process of
such behavior and interactions depends on the behavior of demand and supply. According to
Mankiw (2010), prices or the money the consumer is willing to pay are the instrument with which
the invisible hand directs economic activity. In any given environemnt or a market, buyers look at
the cost of the goods when determining how much to demand, and sellers look at the price and
how much they get in return when deciding how much to supply. As a result of the decisions that
buyers and sellers make, market prices reflect both the value of a good to society and the cost to
society of making the good. Hence, it is determined that demand creates supply, and those factors
are co-related and they interdepend on each other. On this case of prostitution market, laws and
their enforcement can increase the price of prostitutes, or the hassle of acquiring their services, but
it cannot change the unavoidable rule of demand-and-supply. Demand for illicit sex is so strong
that these consumer services thrive without really being advertised.
The model considered here is based on maximization of the utility function for representative
parties; i.e. client and prostitutes/commercial sex workers, whose behavior is rational. Thereby, it
is determined that clients’ utility depends on the amount of sex they enjoy for free, the amount of
prostitution bought, the consumption of ordinary goods, and reputation. Prostitutes’ utility depends
on leisure (time spent not working in prostitution or other jobs), consumption of ordinary goods,
and reputation. Thus, demand and supply curves are derived through which the market equilibrium
is obtained. However, it must be noted that there are various submarkets in the prostitution industry
which will not be considered here as this focus on a generalized approach.
Demand Behavior
• Clients appear to suggest that they demand a complex service from prostitutes, which can
tentatively be labelled ‘control of sex’, rather than, as conventionally believed, simply
sexual services. → Increased demand
• Motivations of men in relationships (variety, specific acts, frequency, outlet for stress) and
single men to explore the prostitution service. This is to fulfill their sexual desires and their
sexual needs. → Increased demand
1
Market Demand and Supply Curve and Price
Determination in the Prostitution Market
Name Thevuni Kotigala
University University of Peradeniya, Sri Lanka
Faculty Faculty of Arts
Programme Masters in Development Practice (MDP)
Course Year 2020/21
Academic Year Pre-MDP
Lecturer Prof. N.D. Samarawickrama
Department Department of Economics & Statistics
Subject Code DPR 403
Subject Name Principles of Economics
Medium English
Market Demand and Supply Curve and Price Determination in the
Topic
Prostitution Market
Word Count 1,038 words
, Study of Economics can be illustrated as the social science that studies the production, distribution,
and consumption of goods and services. Thus, it is understood that Economics also focuses on the
behavior and interactions of economic agents and how economies work. Thereby, the process of
such behavior and interactions depends on the behavior of demand and supply. According to
Mankiw (2010), prices or the money the consumer is willing to pay are the instrument with which
the invisible hand directs economic activity. In any given environemnt or a market, buyers look at
the cost of the goods when determining how much to demand, and sellers look at the price and
how much they get in return when deciding how much to supply. As a result of the decisions that
buyers and sellers make, market prices reflect both the value of a good to society and the cost to
society of making the good. Hence, it is determined that demand creates supply, and those factors
are co-related and they interdepend on each other. On this case of prostitution market, laws and
their enforcement can increase the price of prostitutes, or the hassle of acquiring their services, but
it cannot change the unavoidable rule of demand-and-supply. Demand for illicit sex is so strong
that these consumer services thrive without really being advertised.
The model considered here is based on maximization of the utility function for representative
parties; i.e. client and prostitutes/commercial sex workers, whose behavior is rational. Thereby, it
is determined that clients’ utility depends on the amount of sex they enjoy for free, the amount of
prostitution bought, the consumption of ordinary goods, and reputation. Prostitutes’ utility depends
on leisure (time spent not working in prostitution or other jobs), consumption of ordinary goods,
and reputation. Thus, demand and supply curves are derived through which the market equilibrium
is obtained. However, it must be noted that there are various submarkets in the prostitution industry
which will not be considered here as this focus on a generalized approach.
Demand Behavior
• Clients appear to suggest that they demand a complex service from prostitutes, which can
tentatively be labelled ‘control of sex’, rather than, as conventionally believed, simply
sexual services. → Increased demand
• Motivations of men in relationships (variety, specific acts, frequency, outlet for stress) and
single men to explore the prostitution service. This is to fulfill their sexual desires and their
sexual needs. → Increased demand
1
