Input Price Dispersion Across Buyers and Misallocation

Ariel Burstein, Javier Cravino and Marco Rojas

No 33128, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We leverage a comprehensive dataset of electronic invoices from Chilean firms to document new facts on price dispersion across buyers of manufactured intermediate goods. Over half of firm-to-firm manufacturing sales are accounted for by products that are purchased by more than one buyer in the same month. Price dispersion across buyers is pervasive, with a price range across buyers of 46 percentage points for the average product. Price gaps are highly persistent over time and strongly correlated across different products purchased by the same buyer. While price disparities comove with observable characteristics of buyer-seller pairs—such as size of the buyer and the transaction—these factors account for a small portion of the overall variation in price gaps. We use a workhorse model of production networks to quantify the productivity gains from eliminating observed dispersion in prices across buyers of the same product, under the assumption that this dispersion is driven by buyer-product specific markups. The increase in aggregate productivity (normalized by the sales share of treated multi-buyer firms) ranges from 2 to 7 percent, depending on the calibration of elasticities of substitution. The gains from eliminating markup dispersion across buyers are as large as those of eliminating markup dispersion across products.

JEL-codes: D22 D24 D4 E02 O4 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-com and nep-eff
Note: IO ITI ME PR
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w33128.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
Working Paper: Input price dispersion across buyers and misallocation (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:33128

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33128
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().