Chapter 1:
Describe the evidence that suggests that Chicago prostitutes engage in price discrimination. In addition, explain why it is possible for this particular instance of price discrimination to be successful.
There is a couple of different things that directly show how Chicago prostitutes engage in price discrimination, the first is by skin color. The book directly says “Prostitutes do not charge all customers the same price. Black customers, for instance, pay on average about $9 less per trick than white customers, while Hispanic customers are in the middle” (p 35.) Another big one is giving police officers “freebies”. Some of the more high class prostitutes were able to discriminate even further by raising their rates on people they didn’t like, while still offering the previous rate to favorite customers, this is represented in the book by the statement “She grandfathered in her favorite clients at the old rate but told her less-favorite clients that an hour now cost $400” (p 54.) The last big one to mention is price discrimination for drug dealers, or price negotiations for drugs. Prostitutes are savvy businesswomen who know how to price discriminate very successfully to get what they want. Many factors contribute to why prostitutes are able to pull off such successful price discrimination. The book outlines the two major conditions that must be met to allow price discrimination to be possible in business, customers exhibiting identifiable traits that put them in the “willing-to-pay-more category”, and being able to prevent the resale of your product. Prostitutes are able to meet these needs primarily because prostitution is impossible to resale. Also they are able to identify traits such as skin color that link some people to paying more. This is because prostitutes know that black people tend to
