This morning, the 2008 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Princeton economist Paul Krugman "for his analysis of trade patterns and location of economic activity." The award was bestowed for his academic work — which many have suggested was Nobel-worthy for some time — not his political commentary, though the latter may have played a role. "Krugman is not only a scientist but also an opinion maker," commented one member of the prize committee. Early NYT coverage is here.

UPDATE: I just reread the post and want to make clear that I believe Krugman's Nobel is well-deserved. He is clearly among the most important economists of his generation. My suggestion that his political commentary may have been a factor was not meant to disparage his accomplishment. It was a reaction to the quote in wire story cited above. That said, I will confess some dread at the prospect of hearing "according to Nobel Laureate Paul Krugman . . . " every time someone quotes one of his NYT columns on political issues.

UPDATE: Tyler Cowen discusses the award and Krugman's work here.

David Henderson discusses the importance of Paul Krugman's trade work in today's WSJ.

In the late 1970s, Mr. Krugman noticed that the accepted model economists used to explain patterns of international trade did not fit the data. The Hecksher-Ohlin model predicted that trade would be based on such factors as the ratio of capital to labor, with "capital-rich" countries exporting capital-intensive goods and importing labor-intensive goods from "labor-rich" countries. Mr. Krugman noticed that most international trade takes place between countries with roughly the same ratio of capital to labor. The auto industry in capital-intensive Sweden, for example, exports cars to capital-intensive America, while Swedish consumers also import cars from America.

Mr. Krugman's explanation is based on economies of scale. Both Volvo and General Motors reduce average costs by producing a large output in particular niches of the market. In presenting his trade model, Mr. Krugman planted the seeds for his later work in economic geography, in which he tried to explain the location of economic activity.

He summarized his basic finding (in "Geography and Trade," 1992) as follows: "Because of economies of scale, producers have an incentive to concentrate production of each good or service in a limited number of locations. Because of the cost of transacting across distance, the preferred locations for each individual producer are those where demand is large or supply of inputs is particularly convenient -- which in general are the locations chosen by other producers. Thus [geographical] concentrations of industry, once established, tend to be self-sustaining."