The Professions in Theory and History: The Case of Pharmacy

Economics has no theory of professions as distinct economic institutions. Economists have, however, written extensively about individual professions such as medicine and law and about professions generally. Almost without exception, economic studies of professions take their existence as given and focus on certain behaviors commonly associated with them, such as licensing or bans on advertising. In taking this approach, economists make the implicit assumption that professions are ordinary, though perhaps objectionable, neoclassical firms whose performance we can assess appropriately using the standards we apply to such firms. Even the most rigorous expositions of economic theory as applied to professions view professional conduct as a simple question of market structure: "The policy maker's problem ... reduces to whether professionals hould ... be allowed to retain monopolistic powers" [Shaked and Sutton, 1981, p. 217]. The lack of a theory specific to the professions creates some intriguing problems for the economist's research agenda. To begin with, although professions are defined as firms, professionals are most often modeled as some kind of non-homogeneous self-employed labor. That is, practitioners are assumed to maximize some sort of personal utility function rather than profit. Of course, no one is entirely happy with this artifice, especially because the comparative-static results are often quite sensitive to these arbitrary specifications of utility functions [Foley, Shaked, and Sutton, 1981]. As there is no theory to help us judge among the alternative formulations, economists tend to model each profession differently. Our dissatisfaction i creases as we attempt o apply these models in order to explain the history and organizational