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Price Setting Behavior In An Online Market

Author

Listed:
  • Fiskara Indawan

    (Bank Indonesia Institute)

  • Aryo Sasongko

    (Bank Indonesia Institute)

  • Dian Rahmawati

    (Bank Indonesia Institute)

Abstract

TWe 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.

Suggested Citation

  • Fiskara Indawan & Aryo Sasongko & Dian Rahmawati, 2023. "Price Setting Behavior In An Online Market," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 26(2), pages 192-220, May.
    • Handle: RePEc:idn:journl:v:26:y:2023:i:2a:p:192-220
    DOI: https://doi.org/10.59091/1410-8046.2065
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    More about this item

    Keywords

    Online market; Price setting; Price changes; Price adjustments;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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