Proximity to the Frontier, Markups, and the Response of Innovation to Foreign Competition: Evidence from Matched Production-Innovation Surveys in Chile

This paper employs a matched firm production-innovation panel dataset from Chile to explore the response of innovation increased competition arising China shock. The data cover wider range inputs and outputs than previously possible allow generating measures markups efficiency (TFPQ) that correspond closely concepts rents technological leadership envisaged in Schumpeterian literature. Except for 10 percent most productive plants see an increase quality, depresses innovation. These differences are exacerbated when interacted with plant-level movements rents. (JEL D24, L25, L60, O14, O19, O31, O34)