Digital economy and consumption upgrading: scale effect or structure effect?

The digital economy (DIGI) as a new technology is crucial for promoting consumption upgrading (CU) and unleashing the potential of domestic demand. This study aims to reveal how DIGI affects CU. Based on the data from 30 provinces (cities) in China from 2011 to 2021, we adopt the fixed effect model, threshold effect model and spatial effect model to investigate the impact of DIGI on CU from the perspectives of consumption scale (CQ) and consumption structure (CS). The results show that: DIGI has a positive impact on CQ and CS in China. Regarding sample heterogeneity, there are consumption type and consumer group differences in the impact of DIGI on CU. Additionally, industrial structure and market integration pass the mechanism test for structural effects rather than scale effects. The result of DIGI on CS shows a nonlinear relationship due to market integration. There is also a positive spatial spillover effect of DIGI. The government should promote the development of DIGI, while accelerating industrial restructuring and advancing market integration, thus facilitating CU.