The monetary award, which is equal to those for the five original prizes, stands at $1.4 million this year. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was established by the Swedish central bank in 1968, to mark the 300th anniversary of its founding.
Krugman, 55, a Princeton University professor and New York Times columnist, formulated a new theory of the causes of worldwide urbanization.
"He has thereby integrated the previously disparate research fields of international trade and economic geography," the academy said in its statement.
Krugman will receive the prize in Stockholm on December 10, the anniversary of the death of Swedish industrialist Alfred Nobel, when the laureates in physics, chemistry, medicine and literature also get their awards. The Nobel Peace Prize is awarded in Oslo on the same day.
