Trade Policy and Market Structure

In their previous book Market Structure and Foreign Trade, Helpman and Krugman undertook a systematic analysis of the new trade theory characterized by imperfect competition. This book provides an overview of the new international trade's applied side. It is a compact guide to models of the effects of trade policy in imperfectly competitive markets, an up to date survey of existing knowledge that is extended by the authors' useful interpretations of the results and many original insights.

Trade Policy and Market Structure systematically develops the implications of trade policy under a number of different market structures. It begins with the effect of trade policy under pure competition and then skillfully develops the intuition necessary for understanding the more complicated imperfectly competitive models. Arguments are made more accessible through the use of diagrams, descriptions, and simple algebra.

The book synthesizes the arguments of all the major contributors to the policy applications of the new international economics: Jagdish Bhagwati, James Brander, Avinash Dixit, Jonathan Eaton, Gene Grossman, Richard Harris, Barbara Spencer, and Anthony Venables. Helpman and Krugman draw three themes from this extensive body of research that, expressed in terms of models, occur throughout the book: the effects of trade policy on market power, the strategic effect of trade policy on competition; and the effect of trade policy on consumer choice.

Elhanan Helpman is Professor of Economics at Tel Aviv University. Paul R. Krugman is Professor of Economics at MIT.