Why Prostitutes Cost What They Do by Country

The following was written by a friend of mine (a Russian, who I will from this point on tell him that I believe he came here looking for cheaper female company) as a comment in response to the above photo and blog post:

As professor of economics, I can say the following regarding this price difference. Scarcity is not determined merely by numbers or absolute supply, but rather by the relative supply and demand. As for supply of girls, with relatively low income or opportunities for low skill workers in domestic countries will bring a higher number of prostitutes in to the market for a given transportation/entry cost. Letʼs look at the average incomes in the above mentioned countries. In 2003, Chinaʼs GDP per capita was $5,321, Hong Kongʼs $29,550 Malaysiaʼs $13,317, Philippinesʼ $3,900, and Russiaʼs $12,217. These incomes per capita probably have not changed much relative to each other, so year 2003 will suffice. There is a dramatic difference in average incomes between Hong Kong and China yet no difference in price. Moreover, Malaysia and Russia have about same incomes per capita in 2003, but their girls are at the opposite ends of the price range. It appears that these income differences alone do not explain the price difference. Why? Because we lack another important determinant of value (scarcity) - demand. Compared to Malaysia, Russia is farther away from the Asian market and has more exotic women for local tastes, which unsurprisingly manifests in substantially higher prices. What puzzles me is why services by Chinaʼs women and Hong Kongʼs women have identical prices while their incomes are substantially different, while Malaysian girls are priced lower than Philippines girls despite higher incomes. My guess is that to buyers the difference between Chinese and Hong Kong girls is miniscule and therefore, price is the same. Perhaps, there is not much difference between Malaysian and Chinese girls either, but Malaysiansʼ could be priced lower if it was a local commodity (i.e. the brothel is located in Malaysia). Thus, it would be very important to know where this picture was taken in order to explain this price difference with economic forces rather than history (because history was determined by the same economic forces)!