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1、DoesCompetitionEliminateDiscrimination?EvidencefromtheCommercialSexMarketinSingapore∗HuailuLi†June,2014AbstractBecker(1957)predictsthatcompetitionwilleliminatediscrimination.Incontrast,Diamond(1971)arguesthatevenaninfinitesimalsearchcostcanresultinequilibriumatthemonopol
2、yprice.Inthisstudy,Itestthesetwocompetingtheoriesinarealworldsetting:theredlightdistrict(Geylang)inSingapore,whichisahighlycompetitivelabormarketwhereclients’searchcostsarenegligibleandsearchislegal.Drawingonahybriddiscriminationmodel,Idistinguishbetweenstatisticaldiscr
3、iminationbasedonwillingnesstopayandtastediscrimination.UsingdatafromasurveyIconductedofillegalstreetprostitutesinGeylang,Ifindsexworkersdiscriminateagainstpotentialclientsbasedonethnicitydespiteanexcesssupplyofsexworkers.Thesedifferencesarenotexplainedbythevariationinpros
4、titutequality,sincepricedifferencesremainevenaftercontrollingfortheprostitutes’fixedeffects.Ifindevidenceofbothstatisticalandtastediscrimination.SexworkersaremorelikelytoapproachCaucasianswhoareperceivedashavingahighwillingnesstopay,andlesslikelytoapproachBangladeshiswhoare
5、perceivedashavingalowwillingnesstopay.Thedifferenceininitialpricesofferedtothesetwogroupsisaslargeas36percent.Incontrast,sexworkersavoid∗IamverygratefultoKevinLang,ClaudiaOlivettiandJohannesSchmiederfortheirguidance.IalsowishtothankAndrewOswaldandseminarparticipantsfromAs
6、ianMeetingofEconometricsSociety(2013),SingaporeEconomicReviewConference(2013),MircolunchseminaratBostonUni-versityandBrownBagSeminarinNanyangTechnologicalUniversityfortheirhelpfulcomments.Allremainingerrorsaremine.†DepartmentofEconomics,BostonUniversity.Email:huailu@bu.
7、edu1approachingIndians.Furthermore,ifanynegotiationswithIndiansoccuratall,theyaremorelikelytofail.ThereisevidencethatIndiansareoffered16to32percenthigherprices,suggestingthattheyarevictimsoftastediscrimination.Thesefindingsareconsistentwiththesexworkers’self-reportedattit
8、udesandbeliefs.1IntroductionThecanonicaldiscriminationmodelineconomics,Becker(1957),predictsdiscrimina-tioncan
