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Supply and Demand Economics in the Sex Trade

Updated: Apr 5

It's common to move through life assuming that everyone grasps the fundamentals of our monetary system and economy. With frequent mentions of interest rates, property prices, and inflation in the news, one would expect most people to understand basic concepts like capitalism, free markets, competition, and pricing. After all, many base their voting decisions in part on how leaders manage these factors, and we all likely hold opinions on interest rate adjustments. But how deep is our collective understanding, truly? And how does it intersect with the social justice discourse surrounding sex work and sex trafficking?

The law of supply and demand is the theory that prices are determined by the relationship between supply and demand. If the supply of a good or service outstrips the demand for it, prices will fall. If demand exceeds supply, prices will rise. 

End Demand is a term describing efforts made by sex work abolitionist sex trafficking spaces, with the purpose of “putting a stop to sex trafficking” by eliminating the sex trade all together. This includes criminalization of clients with the intent of reducing demand, which has been proven ineffective, fails to take into account why exploitation actually occurs, and increases the risk of violence and coercion for sex workers. Partial criminalization models create sets of regulations on sexual labor and are typically centered around public morality when presented to the public while creating significant harm and push sex workers further underground. These models limit sex workers’ rights and protections while fostering further stigmatization, with regulations that have a high likelihood of being abused by authority. Certain models of legalization seen in regions that practice it criminalize sex workers who could not for various reasons ranging from finances to autonomy fulfill the responsibilities required to maintain “legality,” thus replicating harms of criminalization.

These harmful models have rallied global support as an effective method of combating human trafficking despite trafficking victims, sex workers, and researchers alike expressing that these models do not avert trafficking at all. The attraction of this “End Demand” strategies is evident: many recognize that people engaged in sex work often do so out of desperation due to economic and personal hardships, and it seems unjust to penalize them for their circumstances. Conversely, there's little sympathy for the clients, and some may even find satisfaction in seeing them face severe punishment.

But this is a knee jerk reaction to a complex social problem.

The most immediate consequence of suppressing demand is that women may be forced to compete for a smaller pool of clients, resulting in them having to offer more services for less pay. The decrease in demand grants remaining clients greater leverage, as they can easily find another worker willing to offer more for less if their demands aren't met. For instance, a woman who previously insisted on safe practices like using condoms might feel compelled to engage in riskier behavior to remain competitive.

Supporters of "end demand" measures contend that individuals involved in the sex trade often face physical or psychological coercion, rendering them unable to make rational, utility-maximizing choices. However, if “pimps” are the ones making decisions, they would undoubtedly resist accepting reduced income due to market downturns; instead, they might resort to heightened coercion and violence to extract additional labor and income from those under their control. Consequently, the outcome remains consistent: decreased demand results in increased supply.

Increased pressure on clients drives sex work to less populated or monitored areas, where the risks for women escalate due to unfamiliar surroundings and lack of immediate assistance.

The "end demand" approach harms sex workers and sex trafficking victims and survivors by eroding their bargaining power, compelling them to accept less pay for more risk, with clients who pose greater danger, in less secure environments. Criminalization alone cannot resolve this issue; we need solutions that address the underlying social and economic factors. Initiatives such as funding affordable housing, childcare, on-demand treatment programs, and accessible education and job training are vital steps toward achieving social and economic justice, rather than investing in more law enforcement measures.

The "end demand" approach often touts itself as applying the simple economic principle of supply and demand, despite lacking support from any credible economist. In the traditional model of "supply and demand," we anticipate the market to autonomously regulate levels of supply and demand through price adjustments. Excess supply drives prices down, stimulating demand to match. Conversely, a shortage of supply raises prices, reducing demand. Changes in demand also influence prices, either encouraging or discouraging supply accordingly.

But this approach simply doesn’t work within marginalized groups of people who trade sex as a means to survival.

"End Demand" policies diminish sellers' bargaining power and attract buyers who are less deterred by risks, potentially increasing unsafe or coercive conditions within the trade.

It's essential to carefully consider the consequences of such a policy if our concern genuinely lies with the welfare of these people who would find themselves competing for diminishing demand for their services. While terminating demand presents a more compassionate alternative to punishing women for their socioeconomic hardships and constrained options, it also introduces hazards to the safety and health of individuals engaged in street-based sex work. End Demand initiatives within the realm of the sex trade may be a reactionary response to a multifaceted social issue, and we must be open to exploring more effective solutions that tackle the underlying causes, such as generational poverty and the scarcity of readily accessible resources.

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