This dissertation investigates whether changes in a country's competition policy affect the flow and direction of its international trade, particularly its exports. We use a monopolistic competition model of trade, which predicts that an increase in domestic firms, resulting from the adoption of a stricter competition policy, has a positive impact on trade volume, including an increase in exports. We empirically test this hypothesis for 14 Canadian manufacturing sectors for the period 1970--1997. We show that the Canadian competition policy, as measured by the concentration ratio of the four largest firms' market share, is inversely and significantly related to the industry's exports, while controlling for other important export determinants. Furthermore, we find that the effect of competition policy changes is bigger in highly concentrated industries than in moderately concentrated ones. This result is in line with the predictions of the monopolistic competition model adopted in the study.
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