NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Monopolistic Competition and International Trade: Reconsidering the Evidence

David Hummels, James Levinsohn

NBER Working Paper No. 4389
Issued in June 1993
NBER Program(s):International Trade and Investment

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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Document Object Identifier (DOI): 10.3386/w4389

Published: Quarterly Journal of Economics, vol. CX, no. 3, pp 799-836, 1995. citation courtesy of

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