Bulletin of Monetary Economics and Banking (Vol 26, Number 2, 2023)

Abstract

We study price-setting behavior in the Indonesian online market before and during the COVID-19 pandemic. We surveyed 297 online and offline markets dominated by Micro and Small Enterprises (MSEs). The results show that the online market's price-setting behaviors apply state-dependent pricing rules and price discrimination, evaluate prices more than once a year based on current information, and immediately respond to a shock. The main factor for price changes is input cost change. Meanwhile, price rigidities are influenced by implicit contracts. The profit model shows online markets face the high-competitive market, not applying a rule of thumb pricing, and frequently changing prices regarding shock.