Research Seminar Microeconomics“Regulation of Professional Services: Licensing in a Moral Hazard Context”Dominique Demougin (U Liverpool)
26 April 2018
The Microeconomics Research Seminar welcomes Dominique Demougin (U Liverpool), who will present his work on
“Regulation of Professional Services: Licensing in a Moral Hazard Context”.
Place: Room 0029, Von-Melle-Park 5
Hour: 17:15 - 18:45
We are looking forward to seeing you there!
Abstract:
We analyze licensing in professional services using a Principal-Agent framework framework. We introduce a theoretical argument di¤erent from the Leland-Shapiro view which also builds on moral hazard, but does not rely on licensing as a potential gate keeper. Though the introduction of license fees increases costs and lowers participation, we
nd that it reduces the marginal price associated with quality.
The optimal license fee balances these di¤erent e¤ects. We use the setup to derive comparative static results and discuss possible impacts of improvements in ICT on license fees. We
nd that the results are more ambiguous than often suggested.