The “New-New” Trade Theory: A Review of the Literature

  • Priya Ranjan
  • Jibonayan Raychaudhuri


We review the literature on the so-called “new-new” trade theory models starting with the pioneering work by Melitz (Econometrica, 71(6):1695–1725, 2003). We review some of the empirical work that motivated the development of these “new-new”  trade theory models. We provide a survey of the theoretical literature on the “new-new” trade theory models and give a short account of the recent empirical work in this area. We also discuss policy implications and welfare implications of trade liberalizations in the context of this framework.


Trade Liberalization Stylize Fact Trade Cost Trade Flow Extensive Margin 
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Copyright information

© Springer India 2016

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of CaliforniaIrvineUSA
  2. 2.Department of EconomicsUniversity of East AngliaNorwichUK

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