Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/298149 
Year of Publication: 
2023
Series/Report no.: 
ADB Economics Working Paper Series No. 703
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
Micro, small, and medium-sized enterprises (MSMEs) are recognized as crucial drivers of economic development, particularly in low- and middle-income countries. The advent of digital platforms, characterized by economies of scale and significant cross-network externalities in two-sided markets, has brought about unprecedented changes to people's daily lives, employment, businesses, and markets. These transformations have unlocked opportunities for MSMEs. In this paper, we analyze the dynamics of e-commerce and how they unfolded during the coronavirus disease (COVID-19) pandemic, using a unique, composite dataset focusing on GoFood merchants in Indonesia. This paper makes a notable contribution by expanding the analysis of the platform efficiency contributions into static efficiency and dynamic efficiency perspectives. Our analysis reveals three key findings. First, online platforms like Gojek offered a novel form of social safety nets for MSMEs. Second, as the COVID-19 pandemic intensified, we observed market congestion externalities and cannibalization tendencies. Third, women- and men-owned businesses opted for different crisis-mitigation and coping strategies. Vulnerable microenterprises, often owned by women merchants with limited support networks and business assets, were disproportionately affected by the pandemic. Overall, our study demonstrates that the rapid acceleration of digital transformation during the COVID-19 pandemic presents unique research opportunities on distributive justice, external effects, and scale economies, as well as related competition policies.
Subjects: 
digital platform
distributive justice
e-commerce
platform economies
MSMEs
scale economies
two-sided network externalities
competition policy
COVID-19 pandemic
JEL: 
D22
D63
L26
L25
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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