Reference no: EM132086842

The state of Louisiana has a "Horticulture Commission," the purpose of which is "to license and/or permit, and regulate persons engaged in horticultural businesses...

The law authorizes the commission to govern the qualifications and practices of persons engaged in these professions and occupations, to prevent fraudulent practices, to encourage participation in continuing education and to ensure that only high quality products and services are provided to the public by green industry professionals."

The law states that "no person shall receive fees, advertise, or solicit business in a regulated profession or occupation unless he/she holds the appropriate license or permit, or has a regular employee who holds the appropriate license or permit, or is employed by a person who holds the appropriate license or permit."

Recently, there was an attempt to get rid of retail florist licensing, but it was rejected "in a 6-1 vote on Tuesday after hearing objections from florists who said they agree with tighter regulations on their industry. 'Having a license is not a barrier,' said Annie Taylor, a licensed florist in Scott. 'To say you are a licensed florist sets you apart in the industry.'" 

The total fee to become a licensed retail florist is $214 and passage of a written exam; what side effects might this fee and exam introduce into the floral market?

Select one:

a. The fee and exam are more likely to exclude low-income entrepreneurs from earning income by being a florist. It may (slightly) exacerbate income inequality since only higher-income individuals would consider the fee and exam to be affordable, who thereafter would be able to earn income as a florist.

b. The low fee helps to ensure that unlicensed florists will not enter the market and attempt to sell high-priced floral products to compete with the lower-priced products of licensed florists. The fee and exam help to prevent new entrants from exercising too much market power.

c. The fee and exam are going to encourage only serious entrepreneurs to become florists. Those who do not really want to become florists will be dissuaded by the requirements, thus ultimately improving the quality and lowering the price of floral products for consumers.

d. Being known as a licensed florist, who passed an exam, will improve the reputation of licensed florists. The fee payment, however, does nothing to affect the florists' reputation. Since both the exam and fee are mandatory, it is unclear whether the requirements will improve the quality and lower the price of floral products in Louisiana.