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The Theory of Interstellar Trade

Paul Krugman, in his blog at NYTimes:

Thirty years ago I was an oppressed assistant professor, caught up in the academic rat race. To cheer myself up I wrote — well, see for yourself. Joshua Gans of the University of Melbourne scanned a copy of the thing I wrote — back then academics did their work with typewriters, abacuses, and stone axes — and was good enough to send me a copy. Ladies and gentlemen, I give you The Theory of Interstellar Trade.

Via Markos.

Krugman raises an interesting question

[H]ow 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.

Quite frankly, I rather doubt that science fiction authors have taken this factor into account.  How do the Ferengi deal with this?  Wouldn’t the later incarnations of Star Trek have been a much better if they’d had writers that were smart enough to wonder about questions like that?  Krugman ends his intro with

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.

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