Why are losses from trade unlikely?

- The general New Trade model with variable costs/substitution is explored.
- The necessary and sufficient condition for trade losses is found.
- The condition means “misaligned” preferences under specific costs.
- Numerical examples show that this case is possible but unlikely.

Examining a standard monopolistic competition model with unspecified utility/cost functions, we find necessary and sufficient conditions on their elasticities for welfare losses to arise from trade or market expansion. Two numerical examples explain the losses (under unrealistic elasticities).