Since the announcement that Princeton University academic and New York Times columnist Paul Krugman had been awarded the Nobel Prize for economics, he has been widely praised for his efforts in academia, with various publications running articles on his academic achievements and his work as a columnist.
Krugman was awarded the prize mainly for opening up new areas of research into international trade theory. Most traditional trade research theories and methodologies start with the assumption that economies operate in a system of perfect competition, that production is of a fixed scale and that each country mainly exports goods for which they have a comparative advantage in producing.
This means that each country starts out with a comparative advantage to engage in an exchange of products for other products from other countries that will increase the wealth of both trading partners.
At the end of the 1970s and the start of the 1980s, Krugman analyzed the characteristics of economies of scale. Krugman also analyzed markets characterized by imperfect competition, and in doing so developed a lot of new avenues for research.
For example, Krugman found that when a product enjoys economies of scale, the average cost of producing the product decreases as the size of the market increases.
This means that manufacturers entering the market and investing in production at an earlier stage will enjoy a greater competitive advantage.
Even if manufacturers in other countries possess an advantage in production technology, they will not be able to gain a market advantage if they enter the market at a later stage. Krugman’s analysis of imperfect market competition also provides a basis from which product differentiation can be analyzed. It also shows that there will be more differentiated products as the scale of the market broadens.
This means that consumers enjoy a choice of brands. In other words, international trade gives consumers more diversity.
In his research, Krugman employed many hypotheses that traditional trade theory did not use. This granted researchers new ways of looking at economic and trade issues. The theories he developed will have profound and long-lasting effects on research into competing products, trade within industries and strategic trade behavior in countries that provide export subsidies.
Krugman also uses simple language when writing books on economic analysis that ordinary people can read. Many of these books have been translated into Chinese in Taiwan.
Krugman’s research abilities and the commitment he displays to academia are something to be admired among today’s economists.
Krugman has also criticized governments over the recent financial crisis and has come up with suggestions. I hope that he can continue to generate policy suggestions because this would help minimize the economic risk that countries around the globe are facing now and in the future.
Wang Jue-shyan is an associate professor of public finance at National Chengchi University.
TRANSLATED BY DREW CAMERON
The Cabinet on Nov. 6 approved a NT$10 billion (US$318.4 million) four-year plan to build tourism infrastructure in mountainous areas and the south. Premier Cho Jung-tai (卓榮泰) on Tuesday announced that the Ministry of Transportation and Communications would offer weekday accommodation discounts, birthday specials and other domestic travel incentives beginning next March, aiming to encourage more travel outside the usual weekend and holiday peaks. The government is right to focus on domestic tourism. Although the data appear encouraging on the surface — as total domestic trips are up compared with their pre-COVID-19 pandemic numbers — a closer look tells a different
For more than seven decades, the Chinese Communist Party has claimed to govern Tibet with benevolence and progress. I have seen the truth behind the slogans. I have listened to the silences of monks forbidden to speak of the Dalai Lama, watched the erosion of our language in classrooms, and felt the quiet grief of a people whose prayers are monitored and whose culture is treated as a threat. That is why I will only accept complete independence for Tibet. The so-called “autonomous region” is autonomous in name only. Decisions about religion, education and cultural preservation are made in Beijing, not
Apart from the first arms sales approval for Taiwan since US President Donald Trump took office, last month also witnessed another milestone for Taiwan-US relations. Trump signed the Taiwan Assurance Implementation Act into law on Tuesday. Its passing without objection in the US Senate underscores how bipartisan US support for Taiwan has evolved. The new law would further help normalize exchanges between Taiwanese and US government officials. We have already seen a flurry of visits to Washington earlier this summer, not only with Minister of Foreign Affairs Lin Chia-lung (林佳龍), but also delegations led by National Security Council Secretary-General Joseph Wu
I recently watched a panel discussion on Taiwan Talks in which the host rightly asked a critical question: Why is the Inter-Parliamentary Alliance on China (IPAC) spearheading a robust global movement to reject China’s ongoing distortion of UN Resolution 2758? While the discussion offered some context, a more penetrating analysis and urgent development was missed. The IPAC action is not merely a political gesture; it is an essential legal and diplomatic countermeasure to China’s escalating and fundamentally baseless campaign to manufacture a claim over Taiwan through the deliberate misinterpretation of a 1971 UN resolution. Since the inauguration of Tsai Ing-wen (蔡英文) as
RSS