Certificate-of-need (CON) laws are intended to restrain health care spending by limiting the acquisition of duplicative capital and the initiation of unnecessary services. Critics contend that need is difficult to objectively assess, especially considering the risks and uncertainty inherent in health care. We compare statewide bed utilization rates and hospital-level bed utilization rates in bed CON and non-bed CON states during the COVID-19 pandemic. Controlling for other possibly confounding factors, we find that states with bed CONs had 12 percent higher bed utilization rates and 58 percent more days in which more than 70 percent of their beds were used. Individual hospitals in bed CON states were 27 percent more likely to utilize all of their beds. States that relaxed CON requirements to make it easier for hospitals to meet the surge in demand did not experience any statistically significant decreases in bed utilization or number of days above 70 percent of capacity. Nor were hospitals in states that relaxed their CON requirements any less likely to use all their beds. Certificate-of-need laws seem to have exacerbated the risk of running out of beds during the COVID-19 pandemic. State efforts to relax these rules had little immediate effect on reducing this risk.

As the COVID-19 crisis intensified, policymakers at the federal, state, and local levels started suspending or rescinding laws and regulations that hindered sen

The nation is on a mission to “flatten the curve ” The goal is not so much to reduce the total number of COVID-19 infections — though that would be ideal — but

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Since the early days of the republic, state and local governments have periodically embarked on widespread, large-scale attempts to spur economic growth through targeted economic development subsidies. Interestingly, the constitutions of nearly every state in the union contain provisions that, on plain reading, make these sorts of subsidies illegal. In this paper, we review the economics, history, and law of targeted economic development subsidies in the United States, focusing on these constitutional anti-aid provisions. This review demonstrates four things. First, subsidies do not work as advertised. In fact, the best evidence suggests that they undermine economic development, fiscal health, and good governance. Second, constitutional anti-aid provisions may be able to affect the size and scope of subsidies, reducing these negative effects. Third, the details matter; not all anti-aid provisions are effective. And fourth, as special interests work to undermine the effectiveness of anti-aid provisions, such provisions must be renewed and strengthened from time to time. We conclude with suggestions for strong constitutional antiaid provisions.

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COVID-19 presents a challenge of extraordinary scale and complexity. State policymakers across the country, like so many of us, want to know what they can do to help our nation’s healthcare professionals rise to this challenge. Their first task should be to eliminate or suspend laws that stand in the way of patient care. They should consider repealing certificate-of-need laws, eliminating barriers to telemedicine, and liberalizing scope-of-practice rules for healthcare professionals.

A half century after he developed it, Gordon Tullock’s idea of rent seeking is more relevant than ever. Though the concept has gained widespread acceptance among academics, it has yet to make an impression on public discourse. But with favoritism, corruption, and the power of special interests in the headlines, the idea deserves broader attention. In this special issue of Public Choice we commemorate Tullock’s insight. Contributors examine the making of this classic piece and its effect on economic theory, empirical analysis, and economic teaching. Original papers also develop new insights into questions of development, the control of violence, corruption, culture, equity, regulation, rent extraction, the Political Coase Theorem, and more.

This paper discusses a national survey of business leaders that sought to determine how government favoritism toward particular firms correlates with attitudes about government, the market, and selectively favorable economic policy. Findings indicate that those individuals who believe they work for favored firms are more likely to approve of free markets in the abstract but also more likely to say the US market is currently too free. These individuals are more skeptical of competition and more inclined to approve of government intervention in markets. They also are more likely to approve of government favoritism and to believe that favoritism is compatible with a free market. Those who have direct experience with economic favoritism or are more attuned to such favoritism are more likely to have distorted perceptions of free-market capitalism and are more comfortable with further favoritism.

One might obtain special favor or avoid disfavor by winning a competitive contest, a socially wasteful process that has been studied extensively in the rent-seeking literature. But favor or disfavor might also be uncontestable. In that case it will be efficient along some dimensions but grossly inequitable. The rent-seeking literature, in focusing on contest success functions, has tended to ignore the institutional roots of uncontestable rent-creation and rent-extraction. But casual observation suggests that institutional rules and cultural norms often ensure that favor and disfavor cannot be easily contested. Understanding that observation helps to resolve the Tullock paradox and explains the evolutionary persistence of inequitable social arrangements. It also illuminates economic and philosophical tradeoffs.

They were formed to provide greater access to healthcare and lower costs, but they may be doing more harm than good.

The use of targeted economic development incentives—or selective financial and regulatory incentives to encourage particular firms to relocate or expand—has proliferated in recent decades. However, the relationship between these targeted incentives and another approach to economic development, economic freedom, has not been studied. This article reviews several new studies assessing this relationship, and provides a review of academic literature evaluating how targeted incentives affect communities as a whole, including those firms and industries not receiving subsidies from government. It concludes by discussing areas for future work.

Federal, state and local tax policy is a mess. The 2,600 pages of the federal tax code are maddeningly complex and unnecessarily inefficient, but why? This chapter gives a detailed account of how the tax code got to where it is today, the role that special interests have played in creating a bloated tax code, and how we can make the tax code fair for all. Key takeaways: (1) Our tax code is a mess because it reflects the interests of groups looking for special tax treatment. (2) It’s imperative that we understand the history and origins of special interests’ influence on the tax code in order to clean up the mess.

In recent years, a raft of studies has examined the effect of various institutions on state fiscal outcomes, especially per capita spending. A review of the literature reveals that one institution has an especially large effect on government spending: states with separate legislative committees overseeing taxing and spending legislation spend significantly less than stateswithout separate committees. The size of this effect was found to be an order of magnitude larger than that of any other institution. Despite this large effect, separate committees are one of the least studied state institutions. We found only one peer-reviewed study of separate taxing and spending committees, and it was based on data from a relatively short time period in the 1980s. We offer the first formal theoretical model of the institution, emphasizing the important role that transaction costs play in political logrolls. We empirically test the model, improving on the previous test with a longer panel (spanning 40 years), a larger set of controls, separate tests on different measures of fiscal policy, and tests to learn whether it makes a difference if taxing and spending committees are separate in one or both legislative chambers. Controlling for other factors, we find that states with separate taxing and spending committees spend between $300 and $450 less per capita than states without separate committees. Having these functions separate in one chamber seems to have a larger effect than having them separate in both chambers. Moreover, the pattern does not hold for all subcategories of state spending.

The advent of ridesharing platforms like Uber and Lyft has prompted regulators everywhere to rethink their approach to the vehicle-for-hire industry. Taxi companies and drivers have called for a level playing field where they can compete on equal footing with ridesharing drivers. The evidence suggests that the best means to provide parity lies in extensive taxi deregulation.In this policy brief, we provide a framework to help policymakers understand the harms of anticompetitive taxi regulations. We organize the discussion around regulations that act as barriers to entry, control prices, and mandate certain business practices. We briefly address the original rationale for taxi regulation—the belief that it was necessary to correct for ruinous competition or for market failures such as asymmetric information—and explain why this rationale is obsolete. We then discuss the unintended consequences of regulation, focusing on the tendency for regulations to benefit incumbent firms at the expense of consumers and would-be competitors. We conclude with a roadmap for regulatory reform that includes specific steps for reform as well as guiding principles for sound regulation.

In 35 states, certificate-of-need (CON) laws in health care restrict the supply of medical services. These regulations require providers hoping to open a new healthcare facility, expand an existing facility, or purchase certain medical equipment such as an MRI machine or a hospital bed to first prove to a regulatory body that their community needs the service in question. The approval process can be time consuming and expensive, and it offers incumbent providers an opportunity to oppose the entrance of new competitors. However, it was originally hoped that these laws would, among other things, reduce healthcare price inflation. In this brief, I review the basic economic theory of a supply restriction like CON, then summarize four decades of empirical research on the effect of CON on healthcare spending. There is no evidence that CON regulations limit healthcare price inflation and little evidence that they reduce healthcare spending. In fact, the balance of evidence suggests that CON laws are associated with higher per-unit costs and higher total healthcare spending.

New technology can cause significant changes in an industry, potentially improving both consumer welfare and governance. The initial reaction of many regulators to the advent of “ridesharing” platforms such as Uber and Lyft was either to outlaw them or to burden them with the same level of regulations as taxis. But policymakers are now beginning to take a new approach. They are aiming to achieve regulatory parity between ridesharing platforms and taxis by deregulating taxis. In a new study, “Rethinking Taxi Regulations: The Case for Fundamental Reform,” Mercatus research fellows Michael Farren and Christopher Koopman and senior research fellow Matthew Mitchell determine that taxi regulation is outdated in light of the transformative technology changes and business innovations of the last few years. Now is an opportune time for fundamental reform of the entire regulatory regime to create a fair, open, and competitive transportation market.

Filing of the Mercatus Center at George Mason University to the Federal Trade Commission for the FTC's June 9, 2015 workshop on "The “Sharing” Economy: Issues Facing Platforms, Participants, and Regulators."