We study the procompetitive effects of international trade, or lack thereof, inmod- els with monopolistic competition, firm-level heterogeneity, and variable markups. Under standard restrictions on consumers’ demand and the distribution of firms’ pro- ductivity, wederivetwotheoreticalresults. First, althoughmarkupsvaryacrossfirms, the distribution of markups and the share of aggregate profits in revenues are invari- ant to changes in openness to trade. Second, although the distribution of markups and the share of aggregate profits in revenues are unaffected by trade, gains from trade liberalization are weakly lower than those predicted by the models with con- stant markups considered in Arkolakis, Costinot, and Rodríguez-Clare (2012).
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