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Monopolistic Competition and International Trade: Reconsidering the Evidence

  • David Hummels
  • James Levinsohn

In this paper, we test some propositions about international trade flows that are derived from a model of monopolistic competition developed by Elhanan Helpman. We investigate whether the volume of trade between OECD countries is consistent with the predictions of a modal in which all trade is intra-industry trade in differentiated products. We then repeat the test with non-OECD countries. We also investigate whether the share of intra-industry trade is consistent with a more general theoretical model in which some, but not all, trade is intra-industry trade. Our results lead us to question the apparent empirical success of these models.

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File URL: http://www.nber.org/papers/w4389.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4389.

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Date of creation: Jun 1993
Date of revision:
Publication status: published as Quarterly Journal of Economics, vol. CX, no. 3, pp 799-836, 1995.
Handle: RePEc:nbr:nberwo:4389
Note: ITI
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Web page: http://www.nber.org
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  1. Hummels, D. & Levinsohn, J., 1993. "Product Differentiation as a Source of Comparative Advantage?," Working Papers 324, Research Seminar in International Economics, University of Michigan.
  2. Hummels, David & Levinsohn, James A, 1993. "Product Differentiation as a," American Economic Review, American Economic Association, vol. 83(2), pages 445-49, May.
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