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The Internet facilitates information flow between sex workers and buyers, making it easier to set up paid sexual transactions online. Despite the illegality of selling sexual services online, Section of Communications Decency Act shields websites from liability for unlawful postings by third parties.

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Consequently, websites such as Craigslist have become a haven for prostitution-related. With prostitution-related sites still in operation, it is imperative to understand the link between these sites and prostitution trends. Using a national panel data set for 1, U. In addition, the analyses reveal that a majority of prostitution activity on Craigslist are induced by organized vice groups, in addition to voluntary participation by smaller set of independent providers.

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Further, we find site entry has a stronger impact in counties with a past history of prostitution and produces spillover effects in neighboring locations that are not directly served by Craigslist. Sex workers providing niche sexual services are found to increase with site entry. In addition, we learn that site entry le to an increase in transactions of existing workers and also attracts new workers to the market.

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We find that the increase in prostitution arrests does not catch up with the growth in prostitution trends brought in by Craigslist. Finally, we find complementarity effects between erotic and casual sex in leading to the increase of prostitution. Our contribute broadly to the emerging literature on the societal challenges associated with online intermediaries and Internet penetration, and serve to provide guidelines for policy makers in regulating the sex industry in the Internet era.

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Economics of Networks eJournal. Legal Perspectives in Information Systems eJournal.

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Cyberspace Law - Student Authors eJournal. Empirical Studies eJournal. Download This Paper. Open PDF in Browser.

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Abstract The Internet facilitates information flow between sex workers and buyers, making it easier to set up paid sexual transactions online. Do you have a job opening that you would like to promote on SSRN?

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