10 September 2010

The market for prostitute-lemons

Put together, these issues imply that there is a potential market for lemons problem between famous men and prostitutes. Fearing that prostitutes might sell their stories, men will tend - at the margin -  to avoid them. This will reduce demand even for good prostitutes, who in turn might withdraw from prostitution into near-substitute professions such as acting, modelling or PR. The upshot will be a sub-optimally thin market. In this sense, Ms Thompson's behaviour has potentially serious consequences.

Made me laugh.

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