1 how strong is the love of variety job market paper adina ardelean purdue university november 2006 abstract models with monopolistic competition and constant elasticity substitution ces preferences have become a mainstay theoretical empirical work in international trade however standard model yields contrafactual predictions on number varieties prices output per that are traded particular predicts rate growth faster than observed data this develops tests more general but still tractable preference structure nests krugman 1980 armington 1969 style limited consumer faces off between buying or higher quantities equilibrium consistent empirics confirm s 42 percent lower assumed one implication existing studies overstate gains from liberalization another impact product economic strength industrial agglomerations smaller typically i am especially grateful to
