Why krugman got nobel prize

Krugman's approach to trade and geography is based on the premise that many goods and services can be produced more cheaply in long series, a concept generally known as economies of scale. Meanwhile, consumers demand a varied supply of goods. As a result, small-scale production for a local market is replaced by large-scale production for the world market, where firms with similar products compete with one another.

Traditional trade theory assumes that countries are different and explains why some countries export agricultural products whereas others export industrial goods. The new theory clarifies why worldwide trade is in fact dominated by countries that not only have similar conditions, but also trade in similar products -- for instance, a country such as Sweden that both exports and imports cars. This kind of trade enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities.

Economies of scale combined with reduced transport costs also help to explain why an increasingly larger share of the world population lives in cities and why similar economic activities are concentrated in the same locations. Lower transport costs can trigger a self-reinforcing process whereby a growing metropolitan population gives rise to increased large-scale production, higher real wages and a more diversified supply of goods. This, in turn, stimulates further migration to cities. Krugman's theories have shown that the outcome of these processes can well be that regions become divided into a high-technology urbanized core and a less developed "periphery.

Krugman becomes the 73rd MIT-related Nobel prize winner. Massachusetts Institute of Technology. Search MIT. Search websites, locations, and people.

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Elizabeth A. Lower transport costs can trigger a self-reinforcing process whereby a growing metropolitan population gives rise to increased large-scale production, higher real wages and a more diversified supply of goods. This, in turn, stimulates further migration to cities. Paul Krugman , US citizen. The Royal Swedish Academy of Sciences, founded in , is an independent organization whose overall objective is to promote the sciences and strengthen their influence in society.

The Academy takes special responsibility for the natural sciences and mathematics, but endeavours to promote the exchange of ideas between various disciplines. English Swedish. Back to top Back To Top Takes users back to the top of the page. Nobel Prizes Thirteen laureates were awarded a Nobel Prize in , for achievements that have conferred the greatest benefit to humankind.

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