The economics of Thailand’s sex tourism industry is an ongoing factor of supply and demand in the market. Its pricing has been observed to lack fundamental logic and confuse people as it does not follow general economic principles. The sex tourism industry in Thailand has been operating for many decades and its sustainability can be analyzed by observing the economics that govern buying and selling behaviors.
The key economic factors include the; quantity supplied, quantity demanded and price of sex workers in Thailand. The quantity of sex demanded by consumers does not rely solely on price because it also depends on the level of those consumers incomes and the price that other goods and services are sold.
Some of these goods and services within Thailand’s sex tourism industry may include alcohol consumption, short time room costs and other adult entertainment.
Services performed by less attractive Thai girls and ladyboys are derivatives of quality prostitution and are not included in the definition of other goods and services. Instead these are product substitutes that are measured as inferior or superior products and services and therefore consumer demand can be measured with utility and elasticity.
An example of the demand function over a period of time is:
QDSW = ƒ (PSW, I, POGS)
The quantity demanded for Thai sex workers equals the function of the price, income and the price of other goods and services.
The quantity of sex workers demanded by consumers is a function of its price. Different values of income and the price of other goods and services results in different demand functions for each consumer.
For example, an increase in the alcohol price directly affects Thailand’s sex tourism industry, may result in a decrease in the quantity of alcohol demanded and an increase in the quantity demanded for sex.
On the other hand, a decrease in the level of income may decrease consumers demand for both sex and alcohol. Consumers could allocate their appropriated funds to purchase other goods and services.
Thai Bargirl and ladyboy sex workers
Substitution for prostitution services with older or less attractive Thai girls and ladyboys may prove to be more affordable. Less utility (enjoyment) is gained and the service is cheaper leading to an increase in the consumers demand for inferior goods and services. The law of demand states quantity demanded by consumers for normal goods and services increases at lower prices. However, an increase of income will decrease demand for inferior products and shift demand to superior products i.e. better looking Thai bargirls.
The economics of Thailand’s sex tourism industry may define ugly Thai girls and ladyboys as inferior products. An example of a shift to a superior product may be consumers demanding sex from youthful Thai women with white skin (determined higher social class) than Thai, Laos or Cambodian bargirls with dark skin (perceived lower class or farmer descent).
The quantity of Thai sex workers available in the market is a function of its selling price. Factors that determine the supply of prostitution in Thailand may include alternate employment opportunities, cost of living and completed education levels.
For example, uneducated bargirls and ladyboys in low income brackets may be lured to participate in the prostitution industry as a substitute to farm and factory work.
The sex tourism industry in Thailand therefore enables unskilled Thai men and women to achieve significant wealth gain compared to low salaries of traditional jobs. The law of supply states as the market price of prostitution increases through inflationary pressures, so does the supply of available Thai sex workers in the industry.
Thai girls and gay men are drawn from low income regions of Thailand to the entertainment zones of Bangkok, Pattaya and Phuket to work in the sex tourism industry. Accumulated funds are remitted back to the homes of Thai families and responses to these bargirls and ladyboys occupations are viewed with ignorance.
An example of hypocrisy is to negatively label these individuals and party locations such as Pattaya in negative ways, yet encourage the practice and exploitation of family members when wealth is achieved.
Sex worker prices in high and low season
We can assume the following by combining the level of supply, demand and price for sex tourism in Thailand. A decrease in consumption is reduced demand, there is an excess supply of available Thai prostitutes and the market price should decrease to the new equilibrium level. The effect during high season results in a temporary spike (increase) in demand putting upward pressure on prices.
The opportunity is identified, the supply of Thai sex workers increases and there is more competition in the market. Thai girls at beer bars, gogos and discos determine high season entitles them to double their usual costs to liaise with farang or they may wait until a more desirable consumer approaches them and still quote a rate above the normal market equilibrium price.
The economics of Thailand’s sex tourism industry reaches equilibrium when the quantity of prostitutes supplied equals the quantity demanded. The market determines the price and there are no dead-weight loses from excess supply or demand of sex workers in Thailand.
The industry does not demonstrate equilibrium pricing when comparing low and high season visitors to Thailand. Instead the sex tourism prices remain above the natural market level (demand pull inflation) in the low season as demand declines.
The supply of sex workers decreases as they complain of the low season effect, leave the city and pack their bags to return home. Some Thai bargirls remain working as prostitutes and produce comments, “no have customer” or “farang stingy”, and are stubborn to accept their asking prices for short and long time are too high and not accepted by consumers.
The negative attitudes drive consumers away from and towards other Thai bargirls and ladyboys who are more accommodating and offer better value.
The correct application in a response to a decrease in demand is to accept the new sex tourism market equilibrium price by adjusting and lowering the asking price. It remains that consumers in the market compete for available goods on the basis of price only. Market forces will drive the asking price of sex workers up or down to the equilibrium value.
Continues in part 2 – There are times when the supply of prostitution in Thailand is inefficient. If supply exceeds demand at the current asking price, price, then Thai girls sit idle waiting…