Abstract: Following the constant increase in income, people's consumption level has gone up notably and consumption structure is improving. The paper has stimulated the elastic character of service consumption of China’s urban residents by using QUAIDS model. The empirical results indicate that service consumption which is represented by traffic, communication, medical and entertainment are flexible, while the service consumption which is represented by domestic service, education and housing lack flexibility. The results explain that urban residents will increase their expenditure in traffic, communication, medical and entertainment with the income increasing. From the regional perspective, the main difference of expenditure elasticity in service consumption is in domestic service, education and housing. In addition, price is another important influence factor to urban residents’ service consumption. Domestic service and medical service’s price is the most sensitive. Therefore, we suggest that, future expansion of domestic demand and improvement of residents’ consumption level should be focusing on increasing purchasing power, perfecting social security, improving the consumption environment and other aspects.
Keywords: Service Consumption, Almost Ideal Demand System, Expenditure Elasticity, Price Elasticity
source:Finance & Trade Economics ,No5,2014