Bulletin of Monetary Economics and Banking

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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 probit model shows online markets face the high-competitive market, not applying a rule of thumb pricing, and frequently changing prices regarding shock.

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