Michal Fabinger - Papers

"Trade and Interdependence in a Spatially Complex World" (Job Market Paper)
Online appendix

Abstract: This paper presents an analytic solution framework applicable to a wide variety of general equilibrium international trade models, including those of Krugman (1980), Eaton and Kortum (2002), Anderson and van Wincoop (2003), and Melitz (2003), in multi-location cases. For asymptotically power-law trade costs and in the large-space limit, it is shown that there are parameter thresholds where the qualitative behavior of the model economy changes. In the case of the Krugman (1980) model, the relevant parameter is closely related to the elasticity of substitution between different varieties of goods. The geographic reach of economic shocks changes fundamentally when the elasticity crosses a critical threshold: below this point shocks are felt even at long distances, while above it they remain local. The value of the threshold depends on the approximate dimensionality of the spatial configuration. This paper bridges the gap between empirical work on international and intranational trade, which frequently uses data sets involving large numbers of locations, and the theoretical literature, which has analytically examined solutions to the relevant models with realistic trade costs only for the case of very few locations.

"A Restatement of the Theory of Monopoly," with Glen Weyl
(under revision at the request of the Journal of Political Economy)

Abstract: We show the equivalence of several parameters of monopoly theory typically considered distinct. In a general (residual) monopoly model we show that the pass-through rate at which cost increases translate into price rises, which is a function of the curvature of demand and cost, in turn determines the division of surplus, the pass-through rate of demand shifts and strategic effects from Bertrand and Cournot competition. These connections generalize and simplify the analysis of industrial organization models, as we illustrate with the example of the Rochet and Tirole (2003) model of monopoly in two-sided markets.

"Price Dynamics for Durable Goods," with Gita Gopinath and Oleg Itskhoki
Slides from early stages of the project are available here.

"A Multidimensional Envelope Theorem with Endogenous Choice Sets," with Glen Weyl