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Cartels By Another Name: Should Licensed Occupations Face Antitrust Scrutiny?

February 15, 2013
By Aaron Edlin and Rebecca Haw

This paper, written by University of California-Berkeley economics professor Aaron Edlin and Vanderbilt University assistant law professor Rebecca Haw, examines how state licensing boards’ creation and enforcement of occupational licensing regulations

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This paper, written by University of California-Berkeley economics professor Aaron Edlin and Vanderbilt University assistant law professor Rebecca Haw, examines how state licensing boards’ creation and enforcement of occupational licensing regulations may not be exempt from antitrust scrutiny from regulators operating under the Sherman Antitrust Act of 1890.

“Despite wide recognition of the potential for economic harm associated with allowing professions to control their licensing rules and define the scope of their art, real reform is elusive,” they write. “Part of the reason is that, in the professional licensing context, the most powerful legal tool against anticompetitive activity appears unavailable. Most jurisdictions interpret antitrust federalism to shield licensing boards from the Sherman Act despite the fact that the boards often look and act like § 1’s principal target. Other avenues for reform, including constitutional suits asserting the rights of would-be professionals, have done little to slow or reverse the trend towards cartelized labor markets.”

“Immunity from the Sherman Act on state action grounds is not justified under antitrust federalism when those doing the regulation are the competitors themselves, where they are not accountable to the body politic, where they have too often abused the privilege, and where the anticompetitive dangers are so clear,” Edlin and Haw write. “The threat of Sherman Act liability can provide the necessary incentives to occupational regulators trading off competition for public safety and welfare. Without it, self-dealing occupational boards will continue to be cartels by another name.”