Prostitution - Transaction-cost Approaches To Prostitution: From Repression To Regulation

Along with many other domains of social life in Western societies, prostitution has increasingly been approached through the lenses of transaction cost economic analysis and risk management. The application of legal economic reasoning has been extended from the regulation of established markets to "informal" economies and, ultimately, to the "economics of crime." (The work of Nobel laureate Gary Becker is foundational here; see also Hellman, pp. 129–144; Posner, pp. 70–80.)

This widespread turn to economic approaches does not, however, imply any general agreement on prostitution policy. Some economic theorists have proposed quite classical Benthamite rational disincentives to deter prostitution as criminal conduct (Hellman). Others have followed Nobel laureate Ronald Coase's theory of the internalization of social costs ("negative externalities") in economic transactions (Coase; Posner, 1992). Still others have argued that prostitution should be promoted as a form of free economic exchange just like any other economic activity that increases aggregate social wealth (these two latter views are not inconsistent with one another; see the extremely influential work of Richard Posner (1992)).

Further, mutually opposing normative views of the labor economics of prostitution structure the debate between the social movements that seek, on the one hand, to advance prostitutes' rights as "sex workers" and, on the other, to "rescue" prostitutes from exploitation in unconscionable labor conditions (Jenness). Recognizing prostitution as a two-sided economic transaction between a sexual service provider and a consumer reframes the "prostitution question" away from focusing solely on the alleged criminality or sociopathology of the prostitute and redirects attention to the consumption behaviors of the customer.