The Economics of Occupational Licensing: Applying Antitrust Economics to Distinguish between Beneficial and Anticompetitive Professional Licenses
![handle is hein.journals/scid19 and id is 571 raw text is: THE ECONOMICS OF OCCUPATIONAL
LICENSING: APPLYING ANTITRUST
ECONOMICS TO DISTINGUISH
BETWEEN BENEFICIAL AND
ANTICOMPETITIVE PROFESSIONAL
LICENSES
NEIL KATSUYAMA*
I. INTRODUCTION
Licenses are used to ensure a minimum standard of quality in a wide
variety of professions that are complex and potentially harmful to
consumers. However, in the past century the number of professions covered
by licenses has quickly grown and now includes bee keepers, lightning rod
salesmen, tree surgeons,' tattoo artists, egg graders, and even fortune
tellers.3 Most patients want their doctors to have a certain level of
knowledge, but it is less clear why consumers care about how much
training and education their fortune tellers receive. The enactment of
licensing laws to cover even the safest of professions has led some to
conclude that licenses are being used for a much more sinister purpose.
Licensing laws can both serve the public by protecting consumers and harm
competition by erecting unnecessary barriers to entry, but what has been
missing from the legal analysis is that licensing laws are best understood as
an economic strategy. The law currently treats licensing as a political
decision that is best left to legislatures, but by applying an economic
framework, the precise mechanism by which licenses are used can be better
understood and analyzed. Economics helped to guide antitrust law to the
core anticompetitive activities by focusing the analysis on market
conditions and efficiency.4 Courts have been better able to combat cartels
J.D. Candidate, University of Southern California Law School, 2010, B.A. Yale University, 2007. I
would like to thank Professor Shmuel Leshem, who provided both guidance and inspiration, and my
father, Michael Katsuyama.
1 Walter Gellhom, The Abuse of Occupational Licensing, 44 U. CHI. L. REv. 6 (1976).
2 Robert Thornton & Andrew Weintraub, Licensing in the Barbering Profession, 32 INDUs. & LAB. REL.
REv. 242, 242 (1979).
3 Emily Sweeney, Town Denies Fortune-teller License, BOSTON GLOBE, May 9, 2004, available at
http://www.boston.com/news/local/articles/2004/05/09/gypsy-disputes-one-year-requirement/.
Robert Bork compared the earlier approaches in antitrust enforcement to a sheriff on a frontier town:
he did not sift evidence, distinguish between suspects and solve crimes, but merely walked the main
street and every so often pistol-whipped a few people. Since then, the more recent cases have adopted
a consumer welfare model.. [and] the best evidence for the proposition is that courts now customarily
speak in the language of economics rather than pop sociology and political philosophy. ROBERT BORK,
THE ANTITRUST PARADOX 6, 427 (1993); Herbert Hovenkamp, Antitrust Policy After Chicago, 84
MICH. L. REv. 213, 216 (1985) (Today more than ever antitrust decisionmakers have been forced to
submit their views to another group of specialists-economists-for evaluation.).](ViewImageLocal?handle=hein.journals/scid19&div=24&collection=&method=preview&ext=.png&size=3)
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