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Monopolistic Competition and International Trade: Reconsidering the Evidence

41 Pages Posted: 29 Jul 2000  

David L. Hummels

Purdue University - Department of Economics; National Bureau of Economic Research (NBER)

James A. Levinsohn

University of Michigan; National Bureau of Economic Research (NBER)

Date Written: June 1993

Abstract

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.

Suggested Citation

Hummels, David L. and Levinsohn, James A., Monopolistic Competition and International Trade: Reconsidering the Evidence (June 1993). NBER Working Paper No. w4389. Available at SSRN: https://ssrn.com/abstract=232061

David L. Hummels (Contact Author)

Purdue University - Department of Economics ( email )

West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

James A. Levinsohn

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-763-2319 (Phone)
734-764-8063 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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