Wednesday, October 13, 2010

Interstellar Trade

The recent discovery of the remarkably Earth-like Gliese 581g, and this vintage Paul Krugman paper on the economics of intersteller trade succeeded in bringing out both the sci-fi and econ nerd in me today.

From the abstract:
This article 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 traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved.

An exciting time to be an Earthling and an economist.

Some choice quotes:
Complications make the theory of interstellar trade appear at first quite alien to our usual trade models; presumably it seems equally human to alien trade theorists...
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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