Input Price Dispersion Across Buyers: New Evidence and Implications for Aggregate Productivity

We use a comprehensive dataset of electronic invoices from Chilean firms to doc-ument new facts on price dispersion across buyers of the same intermediate good. More than half of manufacturing sales involve products purchased by multiple buy-ers within the same month, and price dispersion is pervasive. On average, the price range across buyers for the same product is 46 percentage points. These price differences are highly persistent over time and strongly correlated across different products purchased by the same firm. While price gaps across buyers comove with observable buyerseller characteristics—such as buyer size and transaction volume—these factors explain only a small portion of the observed price differences. Geographic distance and payment method (cash vs. credit) have little explanatory power, suggesting that price gaps reflect markup differences rather than variation in marginal costs. Guided by our data, we use a production network model to quantify the aggregate efficiency gains from eliminating markup dispersion in the sales of manufactured intermediate inputs. Buyer-level markup differences account for 30 to 60 percent of the total productivity gains achievable by equalizing markups across both products and buyers.