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Human Trafficking and Regulating Prostitution

36 Pages Posted: 14 May 2012 Last revised: 30 Nov 2015

Samuel Lee

Santa Clara University - Leavey School of Business; European Corporate Governance Institute (ECGI)

Petra Persson

Stanford University; Research Institute of Industrial Economics (IFN)

Date Written: November 29, 2015


We model a semi-coerced market for sex with voluntary prostitutes and trafficking. Trafficking victims generally constitute a non-zero share of supply in a decriminalized market. We analyze whether prostitution laws can restore the socially optimal outcome that would arise in a decriminalized market free from trafficking. No regulatory regime currently used in practice accomplishes this goal, but a novel policy, which combines the “Dutch” and “Swedish” regimes, would. Our analysis offers guidance for empirical studies on the impact of prostitution laws, and is pertinent to the debate on decriminalization of prostitution.

Keywords: Prostitution, trafficking, contemporary slavery, illegal goods, organ market

JEL Classification: D10, J16, J47, J49, K14, K23

Suggested Citation

Lee, Samuel and Persson, Petra, Human Trafficking and Regulating Prostitution (November 29, 2015). IFN Working Paper No. 996; NYU Stern School of Business EC-12-07; NYU Law and Economics Research Paper No. 12-08. Available at SSRN: or

Samuel Lee (Contact Author)

Santa Clara University - Leavey School of Business

500 El Camino Real
Santa Clara, CA California 95053
United States

European Corporate Governance Institute (ECGI) ( email )

B-1050 Brussels

Petra Persson

Stanford University ( email )

Stanford, CA 94305
United States

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15

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