Abstract

Purpose - The study on the consumption structure of urban residents can help us to understand demand law and to grasp the changing consumption trend of people. Consumption structure is an important indicatorreflecting the people’s living standard. It is of realistic significance to study urban consumption structure. Research data and methodology - This study is carried out with data connected with urban residents from Shandong Statistical Yearbook for the period 2000-2010 analyzing eight commodity groups. The almost ideal demand system (AIDS) is one of the important models related to consumption structure. Results - This paper shows that firstly gives a brief introduction to AIDS. Then it makes an empirical analysis on the urban residents’consumption structure in Shandong province, China on the basis of AIDS model. Conclusions - the authorities are supposed to control the prices of HC, Foodstuff and Housing and encourage the consumption of HC, Housing, EE accordingly. At the same time, local government should increase the supply of goods connected with housing, HA, HC, and EE so as to attract more consumption from the urban residents in Shandong.