IDEAS home Printed from https://ideas.repec.org/p/chb/bcchwp/1006.html
   My bibliography  Save this paper

Input price dispersion across buyers and misallocation

Author

Listed:
  • Ariel Burstein
  • Javier Cravino
  • Marco Rojas

Abstract

We leverage a comprehensive dataset of electronic invoices from Chilean firms to document new facts on price dispersion across buyers of the same manufactured intermediate goods. Over half of firm-tofirm sales in manufacturing are accounted for by products that are purchased by more than one buyer in a given month, with prices ranging by 40 percentage points across buyers for the average product. Price dispersion is pervasive across all manufacturing sectors. Observable characteristics of products and of buyer-seller pairs (including distance, mode of payment, and size of the parties and of the transaction) explain only a small fraction of the variance of price gaps in the data. We use a workhorse model of production networks to quantify the productivity gains from eliminating markup dispersion across buyers of individual products, inferring initial differences in markups from observed price gaps. The increase in aggregate productivity relative to 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.

Suggested Citation

  • Ariel Burstein & Javier Cravino & Marco Rojas, 2024. "Input price dispersion across buyers and misallocation," Working Papers Central Bank of Chile 1006, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:1006
    as

    Download full text from publisher

    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_1006.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Diego Daruich & Julian Kozlowski, 2023. "Macroeconomic Implications of Uniform Pricing," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(3), pages 64-108, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Miguel Faria-e-Castro & Samuel Jordan-Wood & Julian Kozlowski, 2024. "An Empirical Analysis of the Cost of Borrowing," Working Papers 2024-016, Federal Reserve Bank of St. Louis, revised 15 Jul 2024.
    2. Gianluca Antonecchia & Ajay Bhaskarabhatla & Enrico Pennings, 2024. "Bargaining Power and Quantity Discounts to Retailers: Evidence from India’s Pharmaceutical Industry," Tinbergen Institute Discussion Papers 24-048/VII, Tinbergen Institute.
    3. Diego Aparicio & Zachary Metzman & Roberto Rigobon, 2024. "The pricing strategies of online grocery retailers," Quantitative Marketing and Economics (QME), Springer, vol. 22(1), pages 1-21, March.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chb:bcchwp:1006. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alvaro Castillo (email available below). General contact details of provider: https://edirc.repec.org/data/bccgvcl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.