Are Primary Care Physicians, Public and Private Sector Specialists Substitutes or Complements? Evidence from a Simultaneous Equations Model for Count Data

Abstract

In this paper, we examine the relationships between health care visits to general practitioners, public sector specialists and private sector specialists using data from Italy, which has a mixed public-private health care system. We develop a simultaneous equations model that allows for the discreteness of measures of utilization and estimate this model using maximum simulated likelihood. Once common unobserved heterogeneity is properly accounted for, general practitioners, public specialists and private specialists are found to be substitute sources of medical care. In contrast, a naive model finds they are complements.

Keywords: Negative Binomial, Endogeneity, Demand for health care

JEL Classification: C15, C35, H42, I11