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A note on the optimal scope of professional self-regulation

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  • Szczygielski Krzysztof

    (Faculty of Economic Sciences, University of Warsaw)

Abstract

Professions such as doctors and lawyers often enjoy some degree of self-regulation, i.e. they can set the codes of conduct in the market and even determine the rules for joining the profession. We address the problem of the optimal scope of self-regulation. Specifically, we model a profession that can decide about the quality of the service, and we examine if the profession should also be allowed to determine the number of suppliers. We assume that a larger number of professionals reduce the fixed cost of providing quality, and hence the motive to restrict entry is mitigated. Nonetheless, we find that for well-behaved fixed costs functions, the size of the profession preferred by the professionals is smaller than the socially optimal one. Still, if the only alternative to self-regulation is free entry to the profession, then self-regulation is the preferable regime. These findings are relevant for the services that are difficult to substitute by the services produced outside the profession.

Suggested Citation

  • Szczygielski Krzysztof, 2020. "A note on the optimal scope of professional self-regulation," Central European Economic Journal, Sciendo, vol. 7(54), pages 218-226, January.
    • Handle: RePEc:vrs:ceuecj:v:7:y:2020:i:54:p:218-226:n:8
    DOI: 10.2478/ceej-2020-0008
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    References listed on IDEAS

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    More about this item

    Keywords

    professions; self-regulation; oligopoly; vertical product differentiation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • D69 - Microeconomics - - Welfare Economics - - - Other

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