Professional associations and their members: A study of the market for professional services when ability and size are independent

The members of a professional group are organized in an association which influences ability requirements and size in order to keep either the price, its own revenues or the members' incomes as high as possible. Ability is, contrary to earlier approaches, treated as a matter of education rather than selection. The members are free to set quantity and/or price in order to maximize income. The association incentive to influence size and ability is shown to depend on how demand elasticity changes with these variables. New types of misallocations such as ‘exclusive incompetence’ may emerge.