Wednesday, October 13, 2010
Krugman's universe
Some horrible people say that economists (particularly theory types) suffer from physics-envy. I would not say that, in public anyway, 'though as envies go it could be worse. Not content with suffering such insults, Paul Krugman has just published a paper (though written in 1978) providing the long awaited unification of trade theory and inter-stellar travel.
This article extends interplanetary trade theory 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 traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved.
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