Like the market for any commodity or service, the illicit commercial sex market is a function of supply and demand. Wherever demand occurs, supply and distribution emerge. The sex industry is lucrative and it has expanded rapidly in worldwide within the past few decades. For the men and women working in the sex trade, prostitution provides a way for people of low education to earn a high salary (Shrage, Laurie,2010). For the different countries, Sex tourism is the major source of foreign exchange and is vital to world’s economy. Unfortunately, only within the past three decades has the world governments given much attention to the social costs, such as the spread of HIV and the growth in human trafficking that the sex industry creates (World AIDS Campaign,2010 and CATW,2006).

Sexual economy referred to the resources men offer to women in order to acquire sex. In this sense, the heterosexual community is considered as a marketplace where sex is bought and sold. Where in the sex economy men are the buyers, and women are the sellers (Griswold, Michael,2011). The decisions made regarding sex between a man and a woman may be influenced by the market conditions. As with all economic principles, price is determined by supply and demand, product variety, complicity among sellers, competition between sellers as well as other factors will all determine the price of sex. Becker Gary (1976) was the first theorist to define human behavior in terms of economics.

There are four main assumptions to his definition. First, an individual’s behavior is interrelated in a market system in which individual choices are determined by cost and benefit in the framework of stable preferences. Second, scarce desirable resources are assigned by shifts in price and other influences on the market. Third, those that sell goods and services will compete with one another, and fourth people want to maximize their outcomes. This theory is used in a cultural sense to analyze the behavior of individuals as it is shaped by the market (Becker, Gary S.,1976). The interaction between a man and a woman through the evaluation of cost and benefit to each is referred to as Social Exchange Theory. If each one gains more than it loses in an interaction, the exchange will continue. Therefore, the main crux of the social exchange theory is the assumption that in every social interaction each person gives and gains something from the other, which is what constitutes the exchange. The broader market as well as individual preferences will determine the value of the gain and exchange process.

The application of economic principles to social rewards enables the prediction of the way in which social behavior will advance. In using the social exchange theory to analyze sex, sex is viewed as a female resource (Wang, Emily,2009). The woman is giving the man sex, which is considered as valuable. The interaction is mis-represented unless the man gives the woman back something in return of equivalent value. Scarcity increases the value of a commodity, as emphasized by social exchange theorists (Cockerille, James,2007). If a woman is known to provide sexual favours regularly to different men she is perceived as of low value. A woman is perceived as of a high value if she rarely provides sexual favours. In this sense a woman’s sexual favours are a non renewable resource, which provides a woman with an incentive to allocate them moderately. Therefore, the sex for a man has ample benefits at little cost, however for a woman, the cost is substantial even if the pleasure is high. Sex evolves into part of an economic system (Altink, S.,1995). The price of sex is not limited to money, it has a wide conception of resources including, respect, love, time, gifts, affection or commitment. Negotiation is dependent on the going rate of price, that is a better deal for the man or the woman (Anderson, B., 2006). The most obvious indication of the extent to which she is desired by men is her beauty and sex appeal. A woman who conforms to the standards of beauty set out by the society in which she lives can command a higher price than women who do not conform to this standard. Sexual norms are therefore characterized by a local going rate as to the acceptable price for sex. There will be a variation in rates between different cultures, and across divergent historical periods (Barry, K., 1995).

During the third quarter of the twentieth century sexual attitudes and behaviours encountered a considerable conversion. The sexual revolution served as a “market correction” in which the price of sex was significantly reduced. Social exchange theory would cite a reason for this as a change in woman’s circumstances such as her no longer needing to depend on a man for finances, and the ability to have sex without getting pregnant, led to a reduction in their reliance on the fact that sex was their most valuable resource (Bernstein, E.,2001). Despite the sexual revolution bringing about many positive changes for women, these changes also served as a disadvantage in the devaluation of their sexual resources. If the price of sex has reduced it, limits their potential to find a suitable mate who will pay the highest price, because he can find sexual resources elsewhere without having to pay more (Chapkis, W.,2000).

Supply, Demand and Elasticity: In terms of sex the female resource theory stipulates that supply is constructed by the woman and demand is constructed by the man. When the pool of desirable women is significantly greater than the pool of desirable men, this is an indication that supply has exceeded the demand. This leads to a price reduction in which men can obtain sex by offering next to nothing in exchange (Farr, K.,2005). In reverse a scarcity of desirable women in relation to men proposes that demand is greater than supply which will drive the price up. Pornography and prostitution can be observed as low cost alternatives for the desired other of sex with a coveted women. Economics within the sexual marketplace will advocate that men will be the target of such low cost substitutes, and to some differing degree will be embraced by men (Garcia, L.,2009). If pornographic material can satisfy the male demand for sex, then it may create a reduction for a demand of her specific sexual favours and result in her having to accept a lower price (Glickman, C.,2011). Postulating that the majority of men have a preference for sex with loving female companions, as opposed to the alternative of prostitutes or watching pornography and masturbating, the women within a community could possibly create a monopoly if they are capable of binding together and reducing the competition between themselves.

A viable economic strategy pursed by several monopolies or conglomerates is the artificial restriction of supply in order to push prices up. In the sex economy, this could involve women coming together and agreeing to abstain from sex with a man under strong laws and actions norms(IUSW,2009). In the business world this strategy has been successful enough that governments of countries in advanced nations have implemented laws against it. Therefore women should work together and restrict the supply of sex in order to get a higher price. The cost of commercial sex can influence demand, with some clients preferring lower prices and some clients seeking out higher priced sex workers. In addition to cost, clients’ preferences can also depend on age, attractiveness, personality and character, virginity, body type, and racialized identities (ILO,2006). prostitution supply is solely determined by men’s demand for prostitution and by those who are perceived to enable male clients to pay for sexual services from female sex workers . Visibility and affordability of commercial sexual services also factor into clients’ decisions to pay for sexual services. It is not the number of customers but economic trends and social conditions such as unemployment and a shortage of living wage opportunities that determine the number of sex workers at any given time.

The decision to buy sex is partly shaped by cost considerations (Hughes, D.M.,2001). If the price of commercial sexual services rose, then demand would certainly fall dramatically. In this sense, we can say that a supply of prostitutes who are willing or forced to sell sex at affordable prices creates demand as much as the other way about. Prostitution women in sex work can only be commodities that clients can use however they wish. Lena Edlund and Evelyn Korn (2006) suggest there is a marriage market explanation behind why prostitutes are so well-paid: A woman cannot be both a prostitute and a wife. Combine this with the fact that marriage can be an important source of income for women, and it follows that prostitution must pay better than other jobs to compensate for the opportunity cost of forgone marriage market earnings. By the illicit commercial sex market the need for people to provide a supply and for pimps and traffickers to distribute the supply to buyers would not exist without demand (ITUC,2011).

In commercial sex markets, it is not always true that there are third parties brokering exchanges between those providing commercial sex and the consumers of commercial sex. On the other hand, the incentives of paying for a prostitute continue to be enough to cultivate a demand for prostitution. The demand for prostitutes is inelastic. As prostitutes were arrested, supply dropped which elevated the equilibrium price. Demand stayed the same as customers continued to pay the elevated wages. Allie, a high end prostitute, consistently raised her prices but did not experience a decrease in demand for her services (Kontula, A.,2008).

In Egypt a majority of clients of prostitutes are foreign tourists from Arab gulf states men, significantly add to the sex industry. Despite the large influence that tourism has had upon the sex industry, there is also an important local demand for prostitution. The supply side of the sex industry is predominantly composed of young women or minors from poorer, rural areas in Egypt , North africa and Eastern European prostitutes also work in Egypt, which reflects the increasing globalization of sex industry. Poverty is the primary factor pushing women to join the sex industry (John R, Bradley,2008). Most sex workers are poorly educated and often have several family members that they are supporting financially. In addition, greed, consumerism, the desire to lead a western lifestyle and own western goods, and the low value that Egyptian society places on women all contribute to the increasing number of women who join the sex trade. Prostitution is the most lucrative form of employment that a woman with little education and skills can enter. There are many different locations and forms in which prostitution takes place in Egypt. These including: brothels, massage parlors, discotheques, night clubs, bars, and restaurants.

Sex workers can be divided into four major categories depending on the motives for working in the industry and the conditions under which they work (Anderson, B.,2007):
• The lowest income earners who are sold into the trade and are working under some kind of restraint. Generally, these women work in brothels and teahouses and serve a high number of clients per day.
• The second group consists of those under heavy economic compulsion to work to support dependants.The majority in this group consists of single mothers with low education, typically working to support a child.
• The third group is comprised of women who are young, attractive, and entrepreneurial and enter the sex industry because of the economic incentive.
• The fourth group includes women who perform sex work part-time to supplement their income. They may be students or have regular jobs.

Many sex workers suffer severe from physical damage, including sexually transmitted diseases, and put themselves at higher risk of contracting HIV/AIDS. The psychological harm can be equally destructive. Many women who work in the sex industry experience feelings of extremely low self-esteem and self worth, self-blame and guilt, and extreme depression. Many sex workers also undergo denial of their involvement in prostitution and many sex workers have suicidal tendencies. Research from countries that have already legalized prostitution shows that the legalization or decriminalization of prostitution does not empower the women in prostitution but does everything to strengthen the sex industry (Weekes, A.,2006 and Wilcox, A., Christmann, K., Rogerson, M. & Birch, P.,2009 ).