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Student Blog Series: The Market Dynamics of the Commercial Sex Industry

Posted: May 2, 2019

We are excited to share the final installment of our 2019 Student Blog Series!  The student blog series highlights original pieces authored by first-year law students at Villanova University Charles Widger School of Law. Read on for Sarah Blum’s contribution to the Student Blog Series.

What do the ivory trade and prostitution have in common? Both are industries where market dynamics trump morality. Although efforts to eliminate the illegal market in both industries have gained bipartisan support, the path to doing so remains contentious. Research and history have shown us that pure legalization, however, is not the answer. This overly simplistic solution creates fertile soil for exploitative suppliers by increasing demand to a level that the legal industry can no longer meet and blurs the lines between legal and illegal sales. Although concerns regarding legalizing prostitution primarily lie in grave concerns over human rights, a parallel between the experimental legal sale of ivory and prostitution illustrates and explains how legalization backfires in ending the demand in exploitative industries.

The ivory trade is the sale of ivory tusks of hippopotamus and elephants and has led to the endangerment of both species. Advocates proffered legalization as the solution to the over-poaching of these endangered animals and argued that the legal trade would displace illegal buying and selling, thereby reducing the rate of criminal activity by increasing regulations on the industry itself. However, an experimental legal sale of ivory stocks in 2008 corresponded with a sudden increase in illegal ivory production in Africa and Asia. After the legalization of the ivory trade, the black market for elephant ivory expanded by an estimated 66%. Additionally, seizures of contraband ivory leaving African countries also increased from 4.8 seizures to 8.4 seizures per country per year.

The Princeton researchers who conducted the experimental legal sale point to two possible explanations for why the legal market of ivory did not displace exploitative suppliers. First, if illegal supplies can masquerade as legal supplies, they may have a competitive advantage over legal supplies due to lower production costs. Market economics calls this the “substitution effect,” or the understanding that as prices rise, consumers will replace more expensive items with less costly alternatives. Second, if legalization reduces the stigma associated with consumption of the banned good, the demand may increase by such a large amount that part of the void will be filled with an increase in illicit supply. When the market attempts to correct itself after an increase in demand, it does not discriminate between legal and illegal supplies.

Interestingly, these findings are paralleled in countries that have legalized prostitution. This is because the legalization of prostitution expands the commercial sex market, which includes both voluntary labor and sexual exploitation. Likewise, legalization increases the demand for commercial sex because sex buyers no longer fear punishment. However, unless a consensual supply of those selling sex increases at the same rate, pimps will engage in human trafficking in order to fill this supply deficit and capitalize on a hot market.

Empirical evidence corroborates these market principles. A 2012 study published in World Development found that countries with legalized prostitution are associated with higher rates of human trafficking than countries where prostitution is prohibited. Additionally, the study found that legalizing prostitution fully and decriminalizing the sale of prostitution have the same effect on the increase of human trafficking into those countries. Moreover, when there is a legal option, the illegal sex market continues to profit alongside. Even if there is a marginal increase in the supply of voluntary workers, consumers may continue to forgo this legal opportunity if the black-market economy provides a cheaper alternative. For example, despite there being a legal option in Nevada, about 66 times more money is spent by customers on illegal prostitution in Nevada than in the regulated brothels.

Even more disturbing is the fact that consumers cannot, or choose not to, differentiate between a voluntary prostituted person and a victim of sex trafficking in an environment where prostitution is legal. One buyer in the Netherlands, a model for legalized prostitution, seemed to believe that legalization erased the possibility of sex trafficking, stating that “they all want it don’t they, if it’s legal? If it’s behind the window and it’s obvious and blatant and in your face, that means it’s not underground, it’s not illegal, and they want it.” This mindset is what kept Angelica, a Romanian woman who was trafficked in the Netherland’s Red-Light District for five years, from being discovered. “The problem is that once I was in that brothel, everybody just walked past smiling and waving, or glaring and laughing, including some of the police, because everything was perfectly legal . . . Pimps would tell me it’s legal, that they can do what they want to me because the police are on their side and not mine.” Just as legalizing the ivory trade allowed illegal sales to masquerade as legal sales, legal brothels allow commercial sexual exploitation to masquerade as legal prostitution.

Therefore, despite the inherent moral disagreements between people on both sides of the prostitution debate, it is important to remember prostitution is subject to the same market principles as other industries, and the market has already spoken. Legalization does not substitute the legal trade for the illegal trade, rather it blurs the line between the two and creates fertile soil for human trafficking to thrive.


Sarah Blum received her B.A. in Law and Society from Oberlin College in 2018. Prior to college, Sarah taught English to children in a slum in Nicaragua, inspiring her desire to advocate for victims of human trafficking. While attending Oberlin, Sarah started Project Unbound, a student organization dedicated to educating the community about human trafficking and fundraising for the local human trafficking collaborative. In addition to serving as chair for Project Unbound throughout her undergraduate career, Sarah interned with Covenant House Philadelphia and the Sungate Foundation, both organizations dedicated to fighting human trafficking.



All views expressed herein are personal to the author and do not necessarily reflect the views of Villanova University Charles Widger School of Law or Villanova University.

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