Locally Produced Condoms?
The Los Angeles City Council may require condoms in porn movies produced in the city limits. How will this affect the market? Whether companies stay in L.A. or leave, costs will rise (condom costs if they stay, the costs of relocation, loss of agglomeration economies, if they move outside the city limits). If costs do rise, will that matter to producers? I imagine product demand is fairly inelastic, and they can easily pass the cost increase onto consumers. But even if costs were unaffected, consumer demand might shift far leftward if producers remained in L.A., since customers may not wish to view protected sex. Industry members lobbied strongly against the bill — perhaps because they feared the direct drop in demand rather than the cost increase.