This paper analyzes the welfare effects of trade and industrial policy under oligopoly. It characterizes the form that optimal intervention takes under various assumptions about the number of firms, their conjectures about rivals' responses, product substitutability, and market structures. The study finds that when no domestic consumption occurs, optimal policy under duopoly with a single home firm depends on the difference between firms' actual responses to their rivals and the response that their rivals conjecture. If conjectures are consistent, free trade is optimal. A tax or subsidy is indicated depending on the sign of the difference between the conjectured and actual response. With more than one home firm but still no domestic consumption, an export tax is indicated if conjectures are consistent. Production subsidies and export tax-cum-subsidies can raise national welfare in the presence of domestic consumption, as these policies can mitigate the extent of the consumption distortion implicit in the deviation of price from marginal cost. The paper discusses the implications of oligopoly for trade policy, noting that economic profits are not driven to zero and that a price equal to marginal cost does not generally obtain. These features suggest that trade policy may be a substitute for antitrust policy in an open-economy setting. The paper also considers the role of conjectural variations in determining optimal trade policy, analyzing Cournot and Bertrand conjectures, as well as consistent conjectures. It concludes that when conjectures are consistent, free trade is optimal. The paper also examines the case of multi-firm oligopoly and consistent conjectures, finding that the optimal production (export) tax is zero if there is only one home firm and positive if there are more than one. Finally, the paper considers the case of domestic consumption, finding that there are two further motives for policy intervention: reducing the consumption distortion associated with imperfect competition and addressing the externality caused by the multiplicity of small domestic consumers. The paper concludes that optimal trade or industrial policy requires the weighting of these various influences.This paper analyzes the welfare effects of trade and industrial policy under oligopoly. It characterizes the form that optimal intervention takes under various assumptions about the number of firms, their conjectures about rivals' responses, product substitutability, and market structures. The study finds that when no domestic consumption occurs, optimal policy under duopoly with a single home firm depends on the difference between firms' actual responses to their rivals and the response that their rivals conjecture. If conjectures are consistent, free trade is optimal. A tax or subsidy is indicated depending on the sign of the difference between the conjectured and actual response. With more than one home firm but still no domestic consumption, an export tax is indicated if conjectures are consistent. Production subsidies and export tax-cum-subsidies can raise national welfare in the presence of domestic consumption, as these policies can mitigate the extent of the consumption distortion implicit in the deviation of price from marginal cost. The paper discusses the implications of oligopoly for trade policy, noting that economic profits are not driven to zero and that a price equal to marginal cost does not generally obtain. These features suggest that trade policy may be a substitute for antitrust policy in an open-economy setting. The paper also considers the role of conjectural variations in determining optimal trade policy, analyzing Cournot and Bertrand conjectures, as well as consistent conjectures. It concludes that when conjectures are consistent, free trade is optimal. The paper also examines the case of multi-firm oligopoly and consistent conjectures, finding that the optimal production (export) tax is zero if there is only one home firm and positive if there are more than one. Finally, the paper considers the case of domestic consumption, finding that there are two further motives for policy intervention: reducing the consumption distortion associated with imperfect competition and addressing the externality caused by the multiplicity of small domestic consumers. The paper concludes that optimal trade or industrial policy requires the weighting of these various influences.