Restoring Vision to Consumers and Competition to the Marketplace: Analyzing the Effects of Required Prescription Release
24 Pages Posted: 27 Apr 2018
Date Written: February 27, 2018
Occupational licensing laws can allow professionals to extract rents in the marketplace. In the case of vision services, optometrists have the authority to write prescriptions for contact lenses. Optometrists may choose to conceal this information and force patients to purchase lenses from the professional writing the prescription—resulting in vendor lock-in. In this paper, we investigate the possible effect of the 2004 Fairness to Contact Lens Consumers Act (FCLCA) on the market for vision services by examining state differences in prescription release mandates before 2004. We find that requiring professionals to release prescription information to patients resulted in a 10 to 11 percent reduction in the wages of optometrists. Our results provide some evidence that the FCLCA may have increased consumer welfare by reducing the prices of contact lenses or increasing access to contact lenses.
Keywords: occupational licensing, lock-in, healthcare, optometry
JEL Classification: 44
Suggested Citation: Suggested Citation