ABSTRACT
A growing number of theoretical models proposed under the New Trade Theory seek to explain trade patterns and firm behavior under varying forms of imperfect competition (Helpman and Krugman 1989). These theoretical models have been motivated by a number of stylized facts on the nature of competition in international markets. For example, it has been observed that trade often occurs between a few large buyers and sellers. This is notably the case for agricultural products, where the number of government marketing boards with monopoly power over international trade is extensive. Even in nations where there are no state trading agencies, international trade is often handled by a few large firms (Morgan 1979; Patterson and Abbott 1992). Beyond anecdotal and institutional evidence, there is relatively little empirical evidence on aspects of imperfect competition in international markets, much less international food markets. Furthermore, the new theoretical models do not lend themselves easily to empirical testing. Thus, there has been a call for additional empirical evidence on imperfect competition in international markets using alternative models and tests.
