What Drives Cooperation Between The Government And Corporations Amidst The Economic Digitalization In Indonesia:an Evolutionary Game Theory Analysis

Economic digitalization is imminent,and many countries have taken steps to prepare for its forthcoming.To harness the digital economy’s full potential,a country needs a robust infrastructure and its government’s full support.This study argues that the government and corporations are players in an evolutionary game of economic digitalization and emphasize investigating which factors are crucial to ensure a smooth and profitable transition from the traditional economy to the digital economy.This study concludes that the profit loss due to poor infrastructure,investment ratio,and tax rate highly determines the probability of cooperation through evolutionary game analysis.Ultimately,there are two ways to achieve a successful digital economy;first,the government has to diversify its investment by attracting foreign investment or private investors.By diversifying the capital source,eventually,the investment cost will be lower than the loss of profit from not investing,and the government will eventually cooperate.Second,the government must raise the tax for traditional commerce and reduce the tax for e-commerce;this way,the net profit of switching to e-commerce will be higher than the net profit of choosing traditional commerce,and corporations will eventually digitalize.This study’s analysis result can serve as a theoretical basis for the government to make better economic digitalization regulations.Hopefully,the proposed model can also help us better understand the dynamic and the conflict of interest within the two parties.