ABSTRACT
In the preceding sections we assumed that the reputation capacities were exogenously given and considered only demand and supply for representative agents on both sides of the market. Here we will relax the first assumption. Because of this, we also have to consider demand, supply and equilibrium for the population as a whole. We will not, however, introduce any heterogeneity in the model, which of course has to be done in empirical specifications. To simplify exposition we let the total number of clients and sex workers be the same and equal to N, and without loss of generality we set N = 1.
