The Impact of Input Regulation: The Case of the U. S. Dental Industry

Abstract

THE analysis of input restrictions has been in large part limited to the impact of union jurisdictional rules or occupational licensure.1 There are, however, a significant number of cases where states have chosen to regulate the use of inputs in the production of particular products. Some examples include oyster harvesting, lobstering, medical practice, and dental practice. In some cases, these restrictions are justified on grounds of output limitation-for example, oyster harvesting and lobstering, in order to prevent overproduction due to common-property resource problems. In others, the regulations seem to be put in place to improve the returns to the residual income claimants in the industry being regulated-for example, medical and dental practices. Our analysis considers both restrictions on employment and restrictions on the functions that may be performed by labor inputs. It is demonstrated that, for either case, if the restrictions are effective, the marginal