Why are losses from trade unlikely?

Examining a standard monopolistic competition model with unspecified utility/cost functions, we find necessary and sufficient conditions on their elasticities for welfare losses to arise from trade or market expansion. Two numerical examples explain the losses (under unrealistic elasticities). •The general New Trade model with variable costs/substitution is explored.•The necessary and sufficient condition for trade losses is found.•The condition means “misaligned” preferences under specific costs.•Numerical examples show that this case is possible but unlikely.