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The Nature of the Original "Firm": A Coasean Cost-Benefit Analysis of Legalizing Prostitution Open Access

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Though there have been many studies of prostitution from the legal perspective, the feminist perspective, the societal perspective, and the moral, ethical, and religious perspective, the current breadth of literature does not include a cost-benefit analysis from which to examine its economic effects. This paper attempts a comprehensive analysis of legalizing prostitution while noting deficiencies in data and recognizing variations when interpreting existing data. The most salient monetary costs and benefits are discussed and calculated, and many others are included for the sake of a more developed examination. After a sensitivity analysis and a brief discussion of how Coase's theorem may be utilized to determine economic efficiency, the conclusion and final recommendation is that, because economic benefits vastly outweigh economic costs, all states could benefit economically from legalizing prostitution.

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