Mr. Krugman, born in 1953, and a professor at Princeton University in New Jersey and a columnist for The New York Times, formulated a new theory to answer questions about free trade, the Royal Swedish Academy of Sciences said.
"What are the effects of free trade and globalization? What are the driving forces behind worldwide urbanization? Paul Krugman has formulated a new theory to answer these questions," the academy said in its citation. "He has thereby integrated the previously disparate research fields of international trade and economic geography," it said.
Mr. Krugman was the lone winner of the 10 million kronor ($1.4 million) award, the latest in a string of American researchers to be honored. In 2007, Americans Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson won the prize for laying the foundations of mechanism design theory.