Would you trust someone who isn’t a dentist to whiten your
teeth? Don’t worry—you likely won’t ever have to make this decision, because in
14 states only dentists can legally perform teeth-whitening services. Those who
offer these services without a license will get fined, or even worse, charged
with a felony (see: Connecticut). This is good, right? I personally wouldn’t
want to pay good money to have some unqualified schmuck to ruin my pearly
whites.
However, the real reason that teeth-whitening is licensed is
that dentists were upset about losing customers to non-dentists who opened businesses
in shopping malls and spas that charged less money ($100-150 as opposed to$300-700) for the same teeth-whitening services. Those dentists eventually persuaded
their state dental-licensing boards to add teeth-whitening to the definition of
the practice of dentistry. Including the 14 states that license
teeth-whitening, 25 states have ordered non-dentist teeth whitening businesses to
shut down. Add the seeming harmlessness of teeth-whitening products already
regulated by the FDA, and it is seems that licensing teeth-whitening is less
about protecting consumers and more about restricting competition and allowing
dentists to retain a monopoly on teeth-whitening. Stigler would say that dentists
“captured” government regulations designed for their benefit. Also, because
dentists deal with the public at large, the costs that licensing imposes on any
one person is small, giving people no real incentive to fight the
licensure.
In 2015, the Supreme Court ruled that the North Carolina
State Board of Dental Examiners had overstepped in barring non-dentists from
performing teeth whitening. But the issue of occupational licensing extends far beyond the dental industry.
It is estimated that occupational licensing costs the U.S. around 3 million jobs and
$203 billion a year.
1 comment:
Resisting the temptation to delve back into full antitrust mode, I won’t get into the significance of Parker v. Brown leading up to the North Carolina Dentistry case, but I feel that it would be sacrilege not to acknowledge its importance.
Instead, in consideration of how Peltzman might address the dentistry case, I would argue that he would say that the regulation clearly represents an attempt towards horizontal price fixing, which would raise the cost of whitening to consumers and result in dead-weight loss. Thus, he would say it only makes sense that some effective opposition would grow in response to the regulation; this would inevitably pressure the relevant government representatives against allowing the regulation to endure (unlike Stigler who would argue that the industry would dominate).
While both would still side with the court’s decision, Peltzman might be more lenient, as he would say that there is more of a chance for the prices to be competitive with some regulation than Stigler would allow, given that Stigler's theory does not take opposition into account.
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