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PaulKrugman’s“Thetheoryofinterstellartrade”,formallypublishedinEconomic
Inquiry482010).
Thisdocumentisapreprintthatshould(exceptforthetypesettingandtheeditor’s
note)matchthepublishedversion.
PostedbyYoramBauman,EconomicInquirycoeditorforMiscellany,Jan262011.
Availableat/pdf/misc/interstellar.pdf.
The Theory of Interstellar Trade
Paul Krugman∗
June 20, 2008
Editor’s note: This article was written in July 1978 but has not been previ-
ously published. With the exception of a few minor edits we are publishing it in
its original form. A PDF of the original typewritten manuscript can be found at
/2008/03/11/economics-the-final-frontier/.
Abstract
This paper extends interplanetary trade theory to an interstellar setting.
It is chiefly concerned with the following question: how 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. A solution is derived from economic theory, and two useless but
true theorems are proved.
∗Assistant Professor, Yale University. This research was supported by a grant from the
Committee to Re-Elect William Proxmire.
1
1 Introduction
Many critics of conventional economics have argued, with considerable justifica-
tion, that the assumptions underlying neoclassical theory bear little resemblance
to the world we know. These critics have, however, been too quick to assert that
this shows that mainstream economics can never be of any use. Recent progress
in the technology of space travel, as well as the prospects of the use of space for
energy production and
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