Paul Krugman's contribution in the development of "new" trade theory pushed the profession beyond the overly simplistic assumption of perfect competition. Since then, new trade theory has tended to be integrated and reconciled with traditional trade theory, undermining its deployment in support of successful strategic trade policy intervention.
Next week, Paul Krugman will receive the 2008 Nobel Prize for Economics. His work on New Trade Theory and New Economic Geography, for which Krugman has been awarded the Nobel, is explained and discussed in this article.
