The Estimation of demand elasticity of Cultural Products for urban and rural household: Dynamic Almost Ideal Demanding System Approach

The main purpose of this paper is to estimate the demand elasticity of cultural Products and to examine the consumption behavior of urban and rural households in this commodity group. For this purpose, the Dynamic Almost Ideal Demanding System (DAIDS) and the seemingly unrelated regression method for the period 1981-2017 were used. The results show that the homogeneity hypothesis for the group of cultural Products in urban households is not confirmed, In other words, urban consumers have a monetary illusion in their consumption of selected goods, That is, rather than considering real income and real prices in their consumption decisions, they consider nominal income and nominal prices. This assumption also applies to rural households. The price elasticity of cultural Products for urban and rural areas is inelastic, which means that these goods cannot be replaced and are essential. In addition, the results show that price changes of other groups have little effect on demand for cultural Products. In addition, the income elasticity of cultural Products for both urban and rural areas is greater than one, and so these are luxury goods; The results of estimating the elasticity of the subgroups of cultural Products also show that education is necessary for the urban areas, but for the rural areas, the elasticity of the commodity is unit. Income elasticity is positive for all groups in urban and rural areas, which is an increase in cultural costs if income is increased.