The Theory of Intersteller Trade

Paul Krugman in a 30-year-old paper (via Pure Pedantry):

PaulkrugmanThis paper extends interplanetary trade theory to an interstellar setting. It is chiefly concerned with the following question: how should interest rates 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 …

Interstellar trade, by contrast, involves wholly novel considerations. The most important of these are the problem of evaluating capital costs on goods in transit when the time taken to ship them depends on the observer’s reference frame; and the proper modelling of arbitrage in interstellar capital markets where — or when (which comes to the same thing) — simultaneity ceases to have an unambiguous meaning …

This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.

More here.