Monopolistically Competitive Markets and the Gains from TradeIntroductionNeoclassical models of international trade provide powerful tools for understanding the gains from trade through the international division of labor. An analysis of the common assumption on which these models are based shows that they all assume perfect competition between firms. However, in reality, we see that for certain industries, market competition is seriously impaired. The analysis of gains from trade cannot therefore be explained by these neoclassical models. New theories of trade have attempted to understand the impact of trade liberalization on these markets. Is competition in certain markets impaired due to market fundamentals and if so, can these markets benefit from trade liberalization? If countries can partly resolve market failures by opening up to trade on paper, are these gains from trade actually observed in real life? In this article, we will first attempt to analyze the reasons for a certain lack of competition, the efficiency problems it causes and how trade liberalization can temper these problems. We will then see to what extent the remedies have been observed in real economic life.1. Monopolistic competition and international trade. The gains from trade in the case of a monopolistic market were described by Krugman. What do these gains consist of? 1.1 Internal economies of scale as a source of market failure Neoclassical theories of trade, namely the Heckscher-Ohlin model, are based on the assumption that perfect competition governs business decisions. However, in reality we can observe that markets in which internal economies of scale occur present ...... middle of paper ...... productive businesses rather than improving competition . However, since the company must face foreign competition, these two visions can be compatible. We can highlight a limit to commercial gains in a monopolistic competitive market when a company, instead of facing its new competitors fairly, engages in dumping practices prohibited by the WTO. Edition, Addison-Wesley, 2000, P. Krugman and R, Obstfeld (figure 1.1, 1.2, 1.3)International Economics, 3rd edition, Macmillan, 1994, Sèodersten, BoPart IIInternational Economics, 3rd edition, Macmillan, 1994, Sèodersten, Bo ( figure 2.1) New evidence of gains from trade in Review of World Economics, 142(4), 2006, R. Feenstra General Agreement on Tariffs and Trade 1994, World Trade Office website www.wto.org