The Rule of Market Structure in foreign Trade (A Case Study of the Manufacturing Sector of Iran)

The purpose of this paper is to identify and analyze the rule of market structure in foreign trade. To accomplish this, total trade flows calculations were made for the 3-digit ISIC manufacturing industries of Iran. The factors determining market structure have been estimated and their effects on foreign trade have been analyzed, using cross-sectional data. The results are consistent with monopolistic competition models of international trade. The extent of intra-industry tradeis greater for industries with many establishments, low concentration ratios, producing differentiated goods, and low degree of economies of scale. In short, the results of the present paper indicate the significance rule of maket structure factors in determining intra-industry trade.