"New" Trade Theory and Policy a Decade Old: Assessment in a Pacific Context

This paper characterizes and evaluates what has been called variously the new, new-view, strategic or industrial organization approach to international trade and trade policy. This approach analyzes trade in strategic environments,' those in which small numbers of large, self-consciously independent agents interact, and in which their activities themselves are interdependently (strategically) linked. The new view's perspectives have been controversial but often because they have been misunderstood. Many of its subtler strengths have remained hidden. The misunderstandings and subtler strengths of the approach are the main themes of the paper. Its secondary emphasis is on applied and empirical work in the new tradition and its policy implications, with special regard to Pacific trade and investment.