Monopoly as a Basis for Trade.

This paper analyzes the case where monopoly in the domestic market for a tradable constitutes the basis for international trade. The pattern of trade and the benefits from trade are shown to be indeterminate. The monopolized product will be imported and free trade will enhance domestic welfare in the presence of international commodity arbitrage, but the product will be exported and free trade may be immiserizing if the domestic firm can discriminate. The analysis is also extended to other cases where monopoly is not the basis for trade but may influence its pattern.