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Trade and Economic Geography: a Note on Krugman’s contribution to Economic Theory


  • Héctor Mauricio Posada Duque

    () (Grupo de Estudio Regionales de la Universidad de Antioquia)

  • Juan Esteban Vélez Villegas

    () (Grupo de Estudio Regionales de la Universidad de Antioquia)


The purpose of this paper is to present the major contributions of Paul Krugman to economic theory. It shows the contribution and influence that articles of 1979 and 1991 have exerted on the renewal of trade theory and the emergence of new economic geography. In these articles, Krugman successfully explains intraindustry trade, trade among developed countries and agglomeration processes, all these phenomena of great importance that had not been satisfactorily explained from the point of view of standard neoclassical models. To do so, he uses a theoretical framework that incorporates monopolistic competition and increasing returns to scale.

Suggested Citation

  • Héctor Mauricio Posada Duque & Juan Esteban Vélez Villegas, 2008. "Trade and Economic Geography: a Note on Krugman’s contribution to Economic Theory," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 69, pages 299-311, Julio-Dic.
  • Handle: RePEc:lde:journl:y:2008:i:69:p:299-311

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    More about this item


    Increasing returns; monopolistic competition; Paul Krugman; new trade theory; new economic geography.;

    JEL classification:

    • B30 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - General
    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General


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