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How to internalise a difficult externality.

Sunday, July 01, 2012
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Houston - we have a problem. The police in Houston, Texas, lack the money and resources to promptly analyze the evidence collected in rape cases. Basic economic theory would say that those who cause a negative externality should contribute to paying for the external costs. So who should pay for rape investigations?

The Houston City Council have decided that the burden for funding these investigations should fall upon the city’s strip clubs. Ellen Cohen, the council member who championed the new law said that “There are negative secondary effects associated with adult-entertainment establishments”. In particular strip clubs should shoulder some of the costs of rape investigations because the establishments can cultivate unhealthy attitudes toward women that can lead to sexual assaults.

The tax is expected to generate up to $3 million in annual revenue. Not surprisingly, the clubs are opposed to the tax and deny that there is a link between strip clubs and violence against women. More on the arguments from both sides can be seen in this Wall Street Journal article.

And while there is nothing funny about sexual violence, I have to admit that I laughed when I saw that the $5 charge per visitor has been labelled a “pole tax”!


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AS & A2 Economics Revision Workshops

AS & A2 Economics - Intensive Exam Coaching & Revision Workshops: Book Now!

Stratford | Fulham | Bristol | Birmingham | Gateshead | Leeds | Manchester

Dates and Locations

AS & A2 Economics - Macroeconomics: National & International Economy (Unit 2),  Global/International Economy (Unit 4)

  • Tuesday 25 March 2014 - London (Stratford City)
  • Wednesday 26 March 2014 - London (Fulham Broadway)
  • Thursday 27 March 2014 - Bristol (Cribbs Causeway)
  • Friday 28 March 2014 - Birmingham (Star City)
  • Tuesday 1 April 2014 - Gateshead (Metro Centre)
  • Wednesday 2 April 2014 - Leeds (The Light)
  • Thursday 3 April 2014 - Manchester (Salford Quays)

Post-Easter (AS Economics Units 1&2 Combined;  Global/International Economy (Unit 4))

  • Monday 28 April 2014 - London (Stratford City)
  • Tuesday 29 April 2014 - London (Fulham Broadway)
  • Wednesday 30 April 2014 - Bristol (Cribbs Causeway)
  • Thursday 1 May 2014 - Birmingham (Star City)
  • Friday 2 May 2014 - Manchester (Salford Quays)

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