This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product … markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity … of exporters relative to non-exporters, within-industry reallocations of resources following trade liberalization, and …

The theoretical result that there are welfare gains from trade is a central tenet of international economics. In a … class of trade models that satisfy a "gravity equation," the welfare gains from trade can be computed using only the open … economy domestic trade share and the elasticity of trade with respect to variable trade costs. The measured welfare gains from …