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Demand Induction with a Discrete Distribution of Patients

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  • D. Fabbri
  • C. Monfardini

Abstract

We test the "induced demand" model on cesarean section, relying on a natural experiment of proportional fee reduction of all delivery procedures. This fee change does not imply any substitution effect and allows a proper measure of the income effect. We extend the demand induction model and derive its testable implications by introducing a discrete class of patients towards which physicians can discriminate their inducement behaviour. The empirical test is performed estimating a simultaneous binary probit model in which the probability of c-section delivery depends on the type of hospital chosen and the latter is allowed to be endogenously determined.

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  • D. Fabbri & C. Monfardini, 2001. "Demand Induction with a Discrete Distribution of Patients," Working Papers 414, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:414
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    Cited by:

    1. Barili, Emilia & Bertoli, Paola & Grembi, Veronica, 2021. "Fee equalization and appropriate health care," Economics & Human Biology, Elsevier, vol. 41(C).
    2. D. Fabbri & C. Monfardini & R. Radice, 2004. "Testing exogeneity in the bivariate probit model: Monte Carlo evidence and an application to health economics," Working Papers 514, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Patricia Triunfo & Máximo Rossi, 2009. "The effect of physicians’ remuneration system on the Caesarean section rate: the Uruguayan case," International Journal of Health Economics and Management, Springer, vol. 9(4), pages 333-345, December.
    4. Barili, E; & Bertoli, P; & Grembi, V;, 2020. "Title: Fees equalization and Appropriate Health Care," Health, Econometrics and Data Group (HEDG) Working Papers 20/09, HEDG, c/o Department of Economics, University of York.
    5. Leonel Muinelo & Máximo Rossi & Patricia Triunfo, 2005. "Comportamiento médico: una aplicación a las cesáreas en el Uruguay," Documentos de Trabajo (working papers) 0605, Department of Economics - dECON.
    6. Arrieta, Alejandro, 2011. "Health reform and cesarean sections in the private sector: The experience of Peru," Health Policy, Elsevier, vol. 99(2), pages 124-130, February.
    7. Tavares, Aida Isabel & Rocha, Tania, 2012. "The demand factors for cesareans in Portugal – some preliminary results," MPRA Paper 43585, University Library of Munich, Germany.

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