Dynamic of Consumer Behaviour in Urban Areas of the Country and Isfahan, an Application of Almost Ideal Demand System

Survey analysis of consumer's behavior of allocating limited income to the purchase of different goods and services is one of the important topics in economics, which is used in economic decision making. In doing economic studies, different methods can be used. In recent years in order to study the sensitivity of commodities prices and the variation of real income, a great attention was given to almost ideal demand system model. In this research, our main objective was to estimate demand function and analysis of consumer behavior in various urban regains of Isfahan province and average of the coun try in the period (1979- 2005), we applied the same technique in compound with habit formation. The results of statistical analysis show that after the Iran-Iraq war period the cost share of the nonfood expenditure in the constant price of year 2005 were be 1.7 and 3 times the cost share of food expenditure in average of the country and Isfahan province respectively. This indicates that in this period the economic welfare was increasing especially in Isfahan province Accordingly to the results of Wald Test, homogeneity and symmetry hypotheses are rejected and habit formation is affected on consumers demand. The signs of price elasticities were as expected for all commodity categories. The estimated income elasticities indicate that in the Isfahan province the “food” and “wear &shoes” and in the average of the country the “food” and “housing & fuel” categories are considered as necessity and other categories are considered luxury.