Does Regulation Affect Economic Outcomes?: The Case of Dentistry

Morris M. Kleiner, Robert T. Kudrle

NBER Working Paper No. 5869
Issued in January 1997
NBER Program(s):   LS

This study examines the role of variations in occupational licensing policies and practices in improving the outputs of services provided to consumers, and the effect of restrictive regulations on the prices of certain services. Theory suggests that more restrictive licensing may raise prices, but that it may also raise demand by reducing uncertainty about the competency of the services. This paper uses unique data on the dental health of incoming Air Force personnel to empirically analyze the effects of varying licensing stringency among the states. We find that tougher licensing does not lead to improved outputs, but does raise prices. Our results cast doubt on the principal public interest argument in favor of the impact of more strenuous licensing practices of the more restrictive states.

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Document Object Identifier (DOI): 10.3386/w5869

Published: Kleiner, Morris M. and Robert T. Kudrle. "Does Regulation Affect Economic Outcomes? The Case Of Dentistry," Journal of Law and Economics, 2000, v43(2,Oct),548-582.

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