Professor Krugman of MIT has been a leader in economists' belated effort to make international trade theory more realistic by taking account of imperfect competition. Here he and Professor Helpman of Tel Aviv provide a valuable distillation of the implications of this work for trade policy. Often "perverse . . . nonconventional . . . and full of paradoxes," the findings do not sweep away earlier reasoning as completely as some people have thought. The text is heavy with algebra and graphs, but there is enough clear prose to permit lay readers to find out where matters stand.