By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.
Proximity to the Frontier, Markups, and the Response of Innovation to Foreign Competition: Evidence from Matched Production-Innovation Surveys in Chile
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 data set from Chile to explore the
response of firm innovation to the increased competition arising from the China shock. The data
cover a wider range of innovation inputs and outputs than previously possible and allow generating
measures of markups and efficiency (TFPQ) that correspond closely to the concepts of rents
and technological leadership envisaged in the Schumpeterian literature. Except for the 10% most
productive plants which see an increase in quality, increased competition depresses most measures
of innovation. These differences are exacerbated when interacted with plant-level movements in
rents.
