The 1980s have seen significant advances in coordinating analyses of foreign trade with those of industrial organization. Contributors to this volume illuminate topics in trade theory, including the role of R & D, the nature of gains from trade, the part played by scale economies, thearguments for intervention, theories of intra-industry trade, international capital movements under monopolistic competition, and economic integration and product differentiation.

A theoretical analysis of international trade and industrial policy, developing and using new models of trade with imperfect competition. Modeling of imperfect competition within international trade has been difficult until recent breakthroughs in this area, which have provided a more realistic view of the world economy. The book builds on the advances provided by such tools as game theory and the theory of monopolistic competition. The first section covers broad and basic trade issues which arise under imperfect competition. Section two examines implications for trade policy covering issues such as strategic trade policy in static and dynamic settings. Section three deals with various structural issues, such as optimal choice of trade liberalizing policies, the formation of trade blocks, and open dualistic economy with externalities.

Avinash Dixit and Joseph Stiglitz revolutionized the modelling of imperfectly competitive markets and launched "the second monopolistic competition revolution". Experts in the areas of macroeconomics, international trade theory, economic geography, and international growth theory examine the success of the second revolution in this collection of papers. They reveal what appears to be "missing" and look forward to the next step in the modelling of imperfectly competitive markets. The text includes a comprehensive survey of the two monopolistic competition revolutions, and previously unpublished working papers by Dixit and Stiglitz that led to their famous 1977 paper.