As we know, the core suggest that free contracting is good. Everything in the core would lead to Walrasian Equilibrium outcomes and this means it is efficient.
During class, we learned that asymmetry of information is a market imperfection that prevents the formation of coalitions and because it exists, sometimes is better to restrict coalitions a little bit further. One example for this is perfect discrimination. Even though it is efficient, the monopolist doesn’t have all the information it requires from the consumer in order to implement it, and even if he could obtain it, costs would be very high.
Another example is prostitution. Even if both parts would benefit from a deal, prohibition is the most common policy for it. There are many reasons of why the government tries to stop prostitution like sexual exploitation and the spread of sexually transmitted infections, but their efforts haven’t eliminate this problems.
In the “Oxford Handbook of the Economics of Prostitution”, by Manisha Shah and Scott Cunningham, the authors explain how prostitution continues to shift from the street to indoor sex work thanks to the Internet. Shah points out that internet facilitates the functioning of prostitution thanks to free classified advertisement, low cost search and even client reviews. "Reviews create reputation for sex workers, much like Airbnb and EBay create reputation for vendors.
Policy makers should start focusing more on using the new technology to solve old problems. Internet could be use to provide voluntary sex and eliminate asymmetry of information involving STI, a deal that could benefit both parts.
Of course there are many things that would need to be regulated with this idea, but it’s a step forward coalitions in one of the world’s oldest professions.