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...International economics north holland publishing company journal of increasing returns monopolistic competition and trade paul r krugman university new haven ct usa yale received november february revised version this paper develops a simple general equilibrium model noncomparative advantage is driven by economies scale which are internal to firms because the markets imperfectly competitive nonetheless one can show that gains from will occur even between countries with identical tastes technology factor endowments introduction it has been widely recognized provide an alter native differences in or as explanation specialization role large production major subtheme work ohlin while some authors especially balassa kravis have argued play crucial explaining postwar growth among industrial cause relatively little attention formal theory for be appeared difficult deal main reason neglect seems implications market structure caused instead approach differs most other treatments under assume ex...