Source: EconLog
by Pierre Lemieux
“Often, when we observe that something does not work correctly (that is, according to consumer demand and the likely opportunity cost of production), we discover that a restraining regulation is the culprit. Consider hearing aids. Why are they so expensive, typically thousands of dollars? Until two years ago, a Food and Drug Administration regulation forbade their sale over the counter and required an audiologist’s prescription …. Whether we model the prescription obligation as a government restriction on supply or as an excise tax on consumers, the effect was higher prices, a reduction in the size of the market, and less incentive for innovation. Who knew what consumers were missing? We got part of the answer when Apple announced that it will soon offer a software update for its $250 AirPods Pro 2 that will give them a hearing-aid function for low-to-medium hearing loss (FDA restriction will remain in place for more severe cases).” (09/22/24)