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Health-Risking Informal Service: Price, Prevalence and Law Enforcement

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Abstract

The health-risking informal service is transacted when the expected extra satisfaction rate exceeds the ratio of the expected extra cost to the formal service price. Its prevalence decreases with the costs of risk bearing for the providers and clients. Law-enforcement effort lowers (raises) the informal service equilibrium price when the ratio of the providers' and the clients' degrees of absolute risk aversion is greater (smaller) than the ratio of the law-enforcement elasticities of their cost bearing. Spending on law enforcement is efficient when the public cost of the expected chain-infection stemming from the informal service exceeds a threshold level.

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File URL: http://www.uow.edu.au/content/groups/public/@web/@commerce/@econ/documents/doc/uow012196.pdf
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Bibliographic Info

Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp05-13.

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Length: 17 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:uow:depec1:wp05-13

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Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
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Keywords: Unsafe sex service; risk bearing; sexually transmitted diseases; public costs; law enforcement;

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  1. Levy, A., 2000. "A Lifetime Portfolio of Risky and Risk-Free Sexual Behaviour and the Prevalence of AIDS," Economics Working Papers wp01-04, School of Economics, University of Wollongong, NSW, Australia.
  2. Levy, Ammon & Justman, Moshe & Hochman, Eithan, 1989. "The implications of financial cooperation in Israel's semi-cooperative villages," Journal of Development Economics, Elsevier, vol. 30(1), pages 25-40, January.
  3. Levy, Amnon, 1992. "An Analysis of the Potential Externalities Affecting the Borrowing Behaviour of Developing Countries," Australian Economic Papers, Wiley Blackwell, vol. 31(58), pages 164-76, June.
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