We develop a simple model of digital markets to analyze the impact of Covid-
19 on the digital transformation of sectors. The lockdown due to Covid-19 is
modeled as a shock that wipes out the physical market, temporarily leaving
digital consumption as the only option. Under plausible assumptions on digital
demand and supply, the model predicts that such temporary shock produces an
irreversible rise of the digital markets. This happens for three distinct reasons.
First, by temporarily eliminating the physical market, Covid-19 provides a strong
incentive for rms to carry out the xed investments necessary to venture into the
digital market (supply channel). Secondly, by forcing even the most reluctant
consumers into the digital market, Covid-19 pushes them to familiarize with
digital platforms, and this condence endures in the post-Covid era (demand
channel). Finally, if consumerstaste for digitalization is a¤ected by the size of
the digital market, a market may be entrapped into a low-digital equilibrium
indenitely. In such context, the lockdown due to the pandemic is the shock
that may unleash the forces of digitalization and tilt the entire sector towards a
high-digital equilibrium (network externalities channel
