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Piga, CAG and Alderighi, M (2014) Selection, heterogeneity and entry in liberal professions. Journal of Economics and Management Strategy, 23 (4). 925 -951. ISSN 1530-9134

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Abstract

We analyze two different cases of entry regulation in professional markets: first, when licensing is a requirement for becoming a professional (lawyers); second, when entry and price restrictions are applied on a geographical basis (pharmacists). Both cases are investigated within a circular model of localized competition and heterogeneous players. The analysis reveals that licensing introduces a selection mechanism which is effective in preventing entry of inefficient players in markets with large ex ante heterogeneity. Furthermore, because in the second case excessive entry is reduced as the degree of heterogeneity increases, our analysis lends support to a policy that simultaneously relaxes entry and price restrictions.

Item Type: Article
Additional Information: Published as Alderighi, M. and Piga, C. A. (2014), Selection, Heterogeneity, and Entry in Professional Markets. Journal of Economics & Management Strategy, 23: 925–951. doi: 10.1111/jems.12074
Uncontrolled Keywords: Liberal professions, Cost heterogeneity, Entry regulation, Localized competition
Subjects: H Social Sciences > HF Commerce
Divisions: Faculty of Humanities and Social Sciences > Keele Management School
Depositing User: Symplectic
Date Deposited: 14 Dec 2015 15:43
Last Modified: 15 May 2019 14:58
URI: https://eprints.keele.ac.uk/id/eprint/1279

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