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The Price of Sin: Case Study in Japan

The economic principles involved with Japanese streetwalkers v. Japanese brothels are simple supply and demand. The "good" in question is in fact a service, and the consumers of the service generally consider the service to be homogeneous regardless of the provider. This is a market characterized by many sellers (both the individual girls on the streets and the brothels) and, since the service is considered homogeneous among the consumers, the market best fits a nearly perfectly competitive market. In such a market, the sellers have no control over price since each transaction is based on auction or bargaining (Samuelson, 1995,p. p. 491). Transactions in this type of market (streetwalking) are also likely to be bargained, at least at the street level, while fixed within the brothels.

The medical officer assumes that if the prices at the brothels is reduced, more servicemen will frequent the brothels and fewer will pay streetwalkers. However, this assumption fails to take into account the perfect competition environment. When the price at the brothel is reduced, the streetwalkers will also have to reduce their own prices (since information is readily available about price to the servicemen). This is because there is some differentiation between the service provided within the brothel (the benefit of medical exams, for example, and the convenience of the brothel setting).

Since this market approximates a perfect competition situation, the market can be assumed to be at or near the equilibrium price level, resulting in neither shortages nor surpluses. Reducing the price per the medical officer's recommendation will increase the quantity demanded, as the medical officer wants, but will decrease the quantity supplied. Without knowing the exact cost structure of the market, it is possible to understand this result since there are costs involved with running a brothel (including overhead, finding and retaining employees, and po...

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The Price of Sin: Case Study in Japan. (1969, December 31). In LotsofEssays.com. Retrieved 11:28, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1688683.html