YAHAGI Ken

Abstract This study develops a theoretical framework to examine prostitution markets and discusses the appropriate regulation to enhance social welfare and prevent the spread of sexually transmitted infections and sexual abuse. We introduce a high-quality prostitution market with intermediaries (e.g., brothel owners) to provide high-quality services (e.g., formal worksites) and a low-quality prostitution market without intermediaries (e.g., informal worksites). This study demonstrates two key findings regarding regulation. First, strict regulation in high-quality markets can inhibit the beneficial activities of intermediaries, leading to lower social welfare. This suggests that lax regulation may be optimal in high-quality prostitution markets. Second, strict regulation in low-quality markets can have the opposite effect, as it encourages intermediaries’ activities and potentially increases social welfare, supporting the case for stricter regulation in low-quality prostitution markets. This study provides a new perspective on the discussion of appropriate regulations.

ABSTRACT Citizens may derive personal benefits from new technologies while remaining uncertain about their potential social harm. Consequently, citizens may delegate the decision of legal prohibition to politicians, but conflicts can arise because politicians may have self‐interested motivations. How does the interaction of uncertainty regarding social harm and politicians' incentives affect the legal prohibition of new technologies? To answer this question, we develop a two‐period political agency model combined with a law enforcement model in which citizens endogenously determine whether to become law‐breaking or law‐abiding citizens. We then demonstrate that (i) when uncertainty regarding social harm is low, politicians tend to opt for under‐enforcement, while (ii) when uncertainty is high, politicians are inclined toward over‐enforcement. Additionally, we show that as politicians have greater motivation to hold office, expected welfare is enhanced when future uncertainty about harm exceeds current uncertainty although this may result in distorted law enforcement.

Why is criminal law enforcement increasingly punitive, despite that the situation has improved for decades? This paper investigates this question from the perspective of political misinformation. To this end, we develop a law enforcement model with political competition and examine how political parties’ campaigns affect voters’ perceptions of crime and equilibrium law enforcement policy. In a political campaign stage, we show that one political party has an incentive to overstate the severity of crime, while the other party has an incentive to correct voters’ beliefs. However, although the two parties attempt to change voters’ beliefs in opposite directions, we find that the total effect of a political campaign is more likely to drive both parties’ policies in a harsh direction.