Mr. Krugman received the award for his work on international trade and economic geography. In particular, the prize committee lauded his work for “having shown the effects of economies of scale on trade patterns and on the location of economic activity.” He has developed models that explain observed patterns of trade between countries, as well as what goods are produced where and why. Traditional trade theory assumes that countries are different and will exchange different kinds of goods with each other; Mr. Krugman’s theories have explained why worldwide trade is dominated by a few countries that are similar to each other, and why some countries might import the same kinds of goods that it exports.
ADDED: I haven't blogged Krugman too much over the years -- click the "Krugman" tag -- but the oldest post is about this entertaining confrontation with Bill O'Reilly, back in August 2004. Those were pre-YouTube days. How satisfying to be able to dig this up so easily:
AND: One of many quotes from that clip that made me laugh: "You are the most un-objective person on the face of the earth."