Licensing Restrictions and the Cost of Dental Care

Licensing Restrictions and the Cost of Dental Care

Empowered by the state legislatures and aligned with the profession they oversee, dental licensing boards inhibit competition through restrictive licensing practices. In the manner of a cartel, most boards have used licensing exams to limit the entry of nonresident practitioners while the number of new dentists trained in their states has also been constrained. This study provides evidence that where regulatory authorities have constructed competitive barriers, dentists systematically raise fees augmenting their earnings. It is estimated that the price of dental services and mean dentist income are between 12 and 15 per cent higher in nonreciprocity jurisdictions when other factors are accounted for. Overall, the annual cost of this form of professional control is approximately $700 million.

Lawrence Shepard

The Journal of Law and Economics

April 1978

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