Abstract

This survey reviews recent contributions to the interface between international trade and industrial organization. Import competition places a substantial limit on domestic market power. In the short run, competitive conditions can influence the speed and efficiency of a domestic market's adjustment to international disturbances. Exports' effects on competition among national sellers are unclear and depend on the scope for price discrimination. Models of trade with monopolistic competition explain intra-industry trade and also the widely observed sensitivity of firm size to market size. Exposure to trade also increases the technical efficiency of production. Diverse policy issues turn on the distinction between national and global welfare and the scope for commitment.

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