Does Competition Eliminate Discrimination? Evidence from the Commercial Sex Market in Singapore

Abstract

The street sex worker market in Geylang, Singapore is a highly competitive market in which clients can search legally at negligible cost, making it ideal for testing Diamond's hypothesis regarding search and monopoly pricing. As Diamond predicts, price discrimination survives in this market. Despite an excess supply of workers, but consistent with their self‐reported attitudes and beliefs, sex workers charge whites (Bangladeshis) more (less), based on perceived willingness to pay, and are more (less) likely to approach and reach an agreement with them. Consistent with taste discrimination, they avoid Indians, charge more and reach an agreement with them less frequently.

Markets Reduce Discrimination

“…Pager (2016) finds that firms that display higher rates of discrimination in an audit study, are less likely to still be in business six years later. Li, Lang, and Leong (2017) study whether discrimination exists in the commercial sex market in Singapore. Finally, Hedegaard and Tyran (2018) as well as Atkin, Colson-Sihra, and Shayo (2021) show that discriminatory behavior is responsive to its costs.…”