Arnold Kling  

Online Trade Barriers

Stock Options as Tax Deferral... Our Loss, China's Non-gain...

Michael Cox writes about trade barriers that affect Internet commerce.

Georgia requires buyers to purchase contact lenses in person, ostensibly to protect their health but in effect as a boost to in-state eyewear retailers. Oklahoma won't allow its citizens to be buried in a casket bought out-of-state. South Carolina inhibits Internet mortgage brokers by requiring companies to maintain an in-state office with regular business hours. Thirteen states won't allow consumers to fill prescriptions over the Internet. Restrictions are common on wine sales, insurance and telemedicine. All 50 states protect car dealers by prohibiting manufacturers from selling direct to consumers over the Internet.

I presume that Cox's essay is based on this study from Robert D. Atkinson and Thomas G. Wilhelm of the Progressive Policy Institute.

For Discussion. Many of these trade restrictions are enacted in the name of protecting consumers. What characteristics of the Internet would imply that consumers need more protection? less protection?

Comments and Sharing

COMMENTS (11 to date)
Boonton writes:

The Constitution was very insightful about this, it granted Congress the right to regulate interstate commerce. These provisions should be abolished by Federal Law on the grounds that they are protectionist trade barriers that inhibit the free flow of commerce between the states for no good reason.

Bruce Cleaver writes:

One Internet characteristic is anonymity, which is inimicable to the practice of medicine (as mentioned in the Cox article). It's tough to believe any reputable doctor could prescribe Viagra (say) without a hands-on medical exam, but it does occur.

Given a few more minutes I could think of other professions where anonymity is counterproductive...

Brad Hutchings writes:

Another anonymity example... Cigarettes, alcohol, porn sales to young people.

Characteristic suggesting less protection: reputation systems. New travels fast on the Internet about bad product, service, etc.


Chris writes:

But the "protect the consumers" bit is a ruse. These regulations, all of them, are there for one reason and one reason only. They are payback to those that contribute heavily the party in power at the state level. Actually, I think a lot of these regulations cross party lines. It's simpily a spoils system for those with the money and access to influence legislators at the state level.

Eric Krieg writes:

Where should the line be drawn?

Should non-doctors be allowed to practice medicine?

Should non-lawyers be allowed to practice law?

All professional licensure laws are nothing more than tarrifs. I wonder how they can survive the ICC challenge?

Bernard Yomtov writes:


Most, but not quite all, are silly. I think "telemedicine" is one thing that should be barred.

First of all, I don't think a physician can offer sound medical advice without ever seeing the patient in person, so the "benefit" is small, non-existent, or negative.

Second, it is too easy to use this as a ruse to provide prescription drugs illicitly. (I think it's fine to get medicine online if it's appropriately prescribed).

Bob Dobalina writes:

I think "telemedicine" is one thing that should be barred.

How is anyone "victimized" by telemedicine? We ought to bar the protectionist prescription racket.

Bernard Yomtov writes:

"How is anyone "victimized" by telemedicine?"

By getting medical advice that is almost necessarily bad, even if the person giving it is really a physician.

Boonton writes:

If the advice is always bad then why wouldn't malpractice lawsuits take care of the problem?

Linda Nevins R. N., M.B.A. writes:

First, I have to admit that I am a R.N. and an Emergency Nurse Practitioner. This does skew my view of healthcare delivery generally, and telemedicine specifically.

Second, healthcare is a unique product of society that cannot be compared to other types of industries. To determine if healthcare need more or less requlation, you have to look at outcomes. Since it deals with life and death, it must.

Third, telemedicine is under the umbrella of telehealth. This encompasses any health/medical information/interaction via electronic media.

Fourth, telemedicine, within itself, is a very broad category of activities. It includes continuing medical/nursing education via video conferencing, video conferencing of specific patient encounter in real-time, reading of x-rays remotely either in real-time or delayed, in house patient monitoring for specific diagnosis (e.g., diabetes, congestive heart failure, high risk pregnancies), school nurses being able to consult with local healthcare professional, and many other types of act ivies. There are many other uses also.

Fifth, given the breath of these activities under the mantel of telemedicine, many issues arise that need to be standardized. Issues like: data transmission, identifiable personal health information (who has access to it and how will it be used, licensure (stadards and qualification vary from state to state as well as country to country, quality (must be equal to or better than an in-office examination so that the probability of the same diagnosis being concluded).

Sixth, given that all of the above paragraph (5) is the end result of expensive knowledge, time and technology, the temptation to take “short-cuts” is ever present.

Therefore, extensive regulation is required in healthcare in general, and specifically in telemedicine because of the potential of anonymity and thus lack of accountability.

Effexor writes:

Technical regulations and product standards may vary from country to country. Having many different regulations and standards makes life difficult for producers and exporters. If regulations are set arbitrarily, they could be used as an excuse for protectionism.

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