Deterring Sex Sales to International Tourists: A Case Study of Thailand,South Korea,and the Philippines

In developing areas, large-scale international tourism often offers a market for illegal goods and services. Unable to directly control sex sales, governments may decide to discourage prostitution by making the industry less profitable. Sex is sold to international tourists in Thailand, South Korea, and the Philippines through the oligopolistic hotel/travel agency and competitive streetwalker markets. Applying legal sanctions prices change and sales decrease in both markets. The per unit cost of law enforcement is borne more heavily by customers on the street and by firms in the hotel/agency market owing to the markets' respective inelastic and elastic demand segments. If enforcement against sellers in both markets represents a fixed cost, initially sales will not decline, but firms will experience diminishing profits. The optimum short- and long-run effects result from applying enforcement against firms in the hotel/agency market.