Monopolistic Competitive Markets and Gains from Trade Introduction Neoclassical 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 reflects that they all assume perfect competition between firms. However, in reality, we can observe that for some industries, market competition is seriously compromised. Therefore, the analysis of gains from trade cannot be explained by these neoclassical models. New theories of trade have sought to understand the impact of trade liberalization on such markets. Is competition in some markets impaired due to market fundamentals, and if so, can these markets benefit from trade liberalization? If countries can partly resolve market failure by opening up to trade on paper, are these benefits from trade actually observed in real life? In this article we will first try to analyze the reasons for a certain lack of competition, the efficiency problems it entails and how trade liberalization can mitigate these problems. Then we will 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 monopolistically competitive market were illustrated by Krugman. What do these earnings 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 firms' decisions. However, in reality we can observe that markets where internal economies of scale are achieved present... half of the paper... productive companies rather than improved competition. However, as the company faces foreign competition, these two views may be compatible. One limit to commercial gains in a monopolistic competitive market that we can highlight is when a company, instead of dealing fairly with its new competitors, engages in dumping practices, which are prohibited by the WTO. Word Count: 1960BibliographyPart IInternational Economics: Theory and Politics, 5th Edition, Addison-Wesley, 2000, P. Krugman and R, Obstfeld (figures 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 website Trade Office www.wto.org