Congratulations Paul Krugman

Krugman wins the Nobel Prize!  From the AP:

STOCKHOLM, Sweden - Paul Krugman, the Princeton University scholar and New York Times columnist, won the Nobel prize in economics Monday for his analysis of how economies of scale can affect trade patterns and the location of economic activity.

Krugman has been a harsh critic of the Bush administration and the Republican Party in The New York Times, where he writes a regular column and has a blog called "Conscience of a Liberal."

He has come out forcefully against John McCain during the economic meltdown, saying the Republican candidate is "more frightening now than he was a few weeks ago" and earlier that the GOP has become "the party of stupid."

More cogently to the prize, the AP continues:

Krugman introduced his theory in 1979 in a 10-page article in the Journal of International Economics.

It posited that because consumers want a diversity of products, and because economies of scale make production cheaper, multiple countries can build a product such as cars. A nation like Sweden can build its own car brands for both export and sale at home, while also importing cars from other countries.

The article also outlined a new theory of economic geography. Krugman's idea was that if two countries were exactly alike, except one had a larger population, real wages would be somewhat higher in the more populous country because companies there could make better use of economies of scale, creating a greater diversity of goods, lower prices, or both.

Because this enhances the welfare of consumers in that country, its population would increase as more people moved there, which would lead to additional increases in real wages.