As Senor Tamzarian said, this is a spat; but it may be the end of it; an accidental firefight broke out between the two sides. We don't know who was where exactly, and that is what matters most. Let us keep negotiating with the Brazilian government; perhaps they can be coaxed into giving Bolivia that territory. If not, then we can consider war, but that should be it; war should be the last resort, after all diplomacy has failed!
Perhaps we could create stronger bonds between all Latin American states with a sort of international delegation (led by Chile, of course), to resolve all current border disputes. That way, we not only create peace and stability, we more effectively exert our influence. Should a nation choose not to show, or force its delegates to leave, their lands become open for claims, which all nations will vote on. Chile would have nothing to lose, since we are the most powerful; but we weaken our enemies in many ways, from creating an 'Andean League,' if you will, to having recognizing another nations claims on parcels of land. Perhaps it is too... grandiose, but it would project Chile's might, and stabilize South America.