Nobel laureate Paul Krugman discusses interstellar trade

Tom James @ 14-10-2008

Recent recipient of the Nobel Memorial Prize in Economics Paul Krugman wrote a humorous academic paper on interstellar trade back in 1978:

This paper extends interplanetary trade to an interstellar setting. It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light?

This is a problem because the time taken in transit will appear less to an observer travelling with the goods than to a stationary observer. A solution is provided from economic theory, and two useless but true theorems are proved.

It should be noted that, while the subject of this paper is silly, the analysis actually does make sense.

This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.

Beautiful. The paper itself is full of zingers and whatnot, and is well worth a read.

[via the FT and David Friedman’s blog][image from Gaetan Lee on flickr]