The Digital Sin City: An Empirical Study of Craigslist's Impact on Prostitution Trends

Information Systems Research (forthcoming)

50 Pages Posted: 24 Oct 2017 Last revised: 2 Apr 2018

See all articles by Jason Chan

Jason Chan

University of Minnesota - Twin Cities - Carlson School of Management

Probal Mojumder

University of Southern California - Marshall School of Business

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business

Date Written: March 28, 2018

Abstract

The Internet facilitates information flow between sex workers and buyers, making it easier to set up paid sexual transactions online. Despite the illegality of selling sexual services online, Section 230 of Communications Decency Act shields websites from liability for unlawful postings by third parties. Consequently, websites such as Craigslist have become a haven for prostitution-related ads. With prostitution-related sites still in operation, it is imperative to understand the link between these sites and prostitution trends. Specifically, in this paper, we quantify the economic impact of Craigslist’s entry on prostitution incidence, and identify potential pathways in which the website affects the sex industry. Using a national panel data set for 1,796 U.S. counties from 1999 to 2008, our analyses suggest that entry of Craigslist to a county leads to a 17.58 percent increase in prostitution cases. In addition, the analyses reveal that a majority of prostitution activity on Craigslist are induced by organized vice groups, in addition to voluntary participation by smaller set of independent providers. Further, we find site entry has a stronger impact in counties with a past history of prostitution and produces spillover effects in neighboring locations that are not directly served by Craigslist. Sex workers providing niche sexual services are found to increase with site entry. In addition, we learn that site entry leads to an increase in transactions of existing workers and also attracts new workers to the market. We find that the increase in prostitution arrests does not catch up with the growth in prostitution trends brought in by Craigslist. Finally, we find complementarity effects between erotic and casual sex ads in leading to the increase of prostitution. Our results contribute broadly to the emerging literature on the societal challenges associated with online intermediaries and Internet penetration, and serve to provide guidelines for policy makers in regulating the sex industry in the Internet era.

Keywords: Economics of IS, Classified Ad Websites, Online Intermediaries, Prostitution, Online Platforms, Crimes, Internet Policy

Suggested Citation

Chan, Jason and Mojumder, Probal and Ghose, Anindya, The Digital Sin City: An Empirical Study of Craigslist's Impact on Prostitution Trends (March 28, 2018). Information Systems Research (forthcoming) . Available at SSRN: https://ssrn.com/abstract=3057722 or http://dx.doi.org/10.2139/ssrn.3057722

Jason Chan (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

HOME PAGE: http://carlsonschool.umn.edu/faculty/jason-chan

Probal Mojumder

University of Southern California - Marshall School of Business ( email )

3670 Trousdale Parkway
Bridge Hall 310
Los Angeles, CA 90089
United States

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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