You've got some points here, inre sticky prices. There is a downward limit on the price of the commodity of "providers". Who are also pretty damned nonfungible.
For openers, on the nonfungibility, there are tiers in the marketplace. Think of this like cars. BMWs sell for more than Kias. Their product is different. In fact, one of the specific products that BMW is selling is that they are a wealthy person's car. Similarly, Saige is selling a very different product than the typical BP netwalker. So she can command a premium for that, and no price drop on the BP B+G will directly impact her business... BUT, if there were a sudden glut of luxury providers in the Buffalo marketplace, some of the clients would re-examine their purchasing decisions.
Now, some hobbyists would like to go to Saige, and instead go to BP netwalkers. Why? Is not the BMW a more universally desireable car? It is. So people spend $140 for a B+G with a netwalker, or $70 for a car BJ with Bianca, in general, because they do not want to spend the $300 on Saige (neglecting personal kinks; I found the car BJ with Bianca in a busy parking lot to be REALLY hot). If she lowers her rates, say, to $250, some of those will upgrade their service. And downward it will ripple.
Say you're looking at 2 providers on equal footing. Similar tier of service, same quality of reviews, similar aesthetic qualities (let's say you're traveling, so you've never seen either of them). Will you consider price in your decision making process? Of COURSE you will! So, in the buffalo/niagara falls area, on that basis, you'd probably go see Victoria Lane for $200 instead of Saige at $300!
For that matter, look at the progression of Saige's personal pricing. She started out at $180/hour, and is now at $300. Why would you figure that would have happened? I suspect it had something to do with being in demand.
There are, as you've pointed out, some other factors. Risks have to be priced in. In Amsterdam, the standard pricing for a B+G is $70 (50 euros). Which serves both of our points reasonably well, yours in that prices are sticky on the downside, and mine in that supply and demand are factors.
There are a BUNCH of other factors that mess with direct supply and demand here, for instance, the appeal of the new, seeing a different girl than last time has perceived value. But in the main, it's still a market. And markets are controlled by supply and demand. It may take time, and it may not be obvious that it's happening, but it will still happen.
Yeah, it's fun to have another prof here to play with.
Market, in this instance, is a component of the “Shadow Economy”. Within this economy reside prostitution, illegal gambling, and illicit drug sales – by the way – all of which gross more revenue than all big oil combined.
To an extent, you’re correct. Supply and Demand are somewhat of a factor in any transaction, but in this Shadow Economy things work a bit differently. Supply and Demand don’t carry as much weight.
The three facets of this market are all addictions. Therefore, to the mind of a buyer, it becomes a cost benefit analysis – a value proposition. It’s all about what the “customer” perceives as value. “Bang” for the buck! Since sex is a very powerful thing, some economic formulas are difficult to apply. (Since consumers are mostly thinking with their “little head”.)
Providers aren’t a fungible commodity, being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind. So, mainly, prices remain static, albeit the occasional “Special”.
Also, Downward Sticky Prices come into play here: the resistance of a price (or set of prices) to change, despite changes in the broad economy that suggest a different price is optimal. "Sticky" is a general economics term that can apply to any financial variable that is resistant to change. When applied to prices, it means that the prices charged for certain goods or, in our case “services”, are reluctant to change despite changes in input cost or demand patterns.
Price stickiness can also occur in just one direction, as in "Sticky-Up" or "Sticky-Down". A price that is sticky-up, for instance, can move up rather easily but will only move down with pronounced variables in the economy, and never return to the original lowest price.
So, at the end of the day, after all this theoretical stuff, the smart provider will never lower her prices.
So far we have two “Professors” chiming in here – me and you. I’m still waiting for “greenpeace”.
P.S. I fell asleep in Economics 101 too!
Originally Posted by The Drummer