Abstract
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 13% 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.
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Notes
The FTC’s website has a sample of advocacy filings related to occupational licensing https://www.ftc.gov/policy/advocacy/economic-liberty/selected-advocacy-relating-occupational-licensing.
In our sample, there were no changes to licensing requirements for opticians or optometrists. State fixed effects capture changes in these regulatory variables.
For more information on the eyeglasses rule, see the Federal Trade Commission website: https://www.ftc.gov/news-events/press-releases/2004/10/contact-lens-rule-16-cfr-part-315-and-eyeglass-rule-16-cfr-part.
Verification of the prescription can be achieved through direct communication with the prescriber. This verification must occur within 8 h. The direct communication can be done via fax, e-mail, or a phone call.
The sample is slightly larger when restricted to respondents with nonzero weeks and hours worked for the purposes of the regressions estimating hours worked.
Ideally, we would be able to test for differences in the effect for states granting prescription release and then the effect of the federal law, but data limitations prevented us from examining this difference.
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Norris, C., Timmons, E.J. Restoring vision to consumers and competition to the marketplace: analyzing the effects of required prescription release. J Regul Econ 57, 1–19 (2020). https://doi.org/10.1007/s11149-020-09399-9
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DOI: https://doi.org/10.1007/s11149-020-09399-9