Mikhail Klimenko
Associate Professor
- School of Economics
Overview
Dr. Mikhail Klimenko received his PhD in Business from Stanford University. He joined the Georgia Tech faculty as an Associate Professor of Economics in the School of Economics in 2004. A specialist in international trade theory and policy and telecommunications economics, he has authored multiple papers and book chapters and presented numerous conference papers. His most recent publication “Global Digital Platforms, Technology Transfer and FDI Policies in Two-Sided Markets” is in the Economic Inquiry (2023).
Professor Klimenko previously taught at the University of California in San Diego and SKEMA Business School (France) and has held visiting appointments at Nankai University (China), the European University (Russia), Universitat Autònoma de Barcelona (Spain), and St. Petersburg State University (Russia). He has received research support from the National Science Foundation, the French Fondation Nationale des Sciences Politiques (Sciences Po), and the Net Institute and served as reviewer for a number of economics journals and expert advisory panels. He has also served as a consultant for the World Bank. His recent teaching has included courses in Microeconomics, International Trade Theory, Economics of Telecommunications, and Law and Economics of the World Trading System. He served as Director of Graduate Studies in the Georgia Tech School of Economics from 2005 to 2011.
- Ph.D., Stanford University
- M.A., Stanford University
- M.A., Brown University
Interests
- Industrial Organization
- International Trade
- Microtheory
Focuses:
- Asia (East)
- Europe
- North America
- United States
- Globalization and Localization
- International Trade and Investment
Courses
- ECON-2100: Economics and Policy
- ECON-2101: The Global Economy
- ECON-4350: International Economics
- ECON-4357: Law&Econ-Global Trading
- ECON-4360: Network Economics
- ECON-6650: International Economics
- ECON-7121: International Econ I
Selected Publications
Journal Articles
- Global Digital Platforms, Technology Transfer and FDI Policies in Two-Sided Markets
In: Economic Inquiry [Peer Reviewed]
Date: February 2023
This paper is motivated by the growing on-line trade and foreign direct investment (FDI) in e-commerce platforms such as Amazon, E-Bay, and Expedia. Using a two-sided markets model, we examine the preferences of a foreign firm and a host country government over two modes of FDI: de novo entry (through the establishment of a new platform) and acquisition of the domestic incumbent platform. Key elements in the model, are technology transfer, cross-side network externalities and platform service differentiation, which determine the ranking of the host country welfare gains and the entrant’s profits under the two entry modes. In the case where the foreign entrant and the host government disagree over the entry modes ranking, asymmetric foreign equity restrictions can induce the welfare-optimal choice of the entry mode by the foreign firm.
- Language, Internet and Platform Competition
In: Journal of International Economics [Peer Reviewed]
Date: July 2021
The dominance of English language content on the Internet raises a question of how consumer bilingualism in a given country affects the amount of home language content and the country's welfare. We address this question by studying two-sided market competition between a foreign and a domestic content distribution platform in a small open economy. On the one hand, bilingualism has the benefit of increasing cross-side network externalities by increasing consumer concentration on the foreign platform, which increases the amount of home language content. On the other hand, bilingualism exposes home language content to competition from foreign language content and softens platform competition, which reduces the amount of home language content. We find that bilingualism mostly increases consumer surplus but can reduce domestic producer surplus. The welfare effect of taxing the foreign platform is also analyzed.
- Duration and Term Structure of Trade Agreements
In: The Economic Journal [Peer Reviewed]
Date: December 2015
We use a dynamic incomplete contracting model to show that time structure of trade agreements is related to the characteristics of trade-facilitating investments. If these investments are specialised to trade in a particular homogeneous good, fixed-term agreements are more likely. Fixed-term agreements provide incentives for the initial investment but leave the parties the flexibility to revisit the need for future investment. If the agreement covers trade in multiple sectors or differentiated goods or services, inter-sectoral spillovers reduce risks of overinvestment. In this case, the parties are more likely to choose an evergreen agreement (with an advance termination notice).
- Policies and International Trade Agreements on Technical Compatibility for Industries with Network Externalities
In: Journal of International Economics [Peer Reviewed]
Date: April 2009
The paper considers a country (home) in which consumers have heterogeneous preferences over ex ante incompatible domestic and imported products and benefit from a network externality. We analyze the cases with trade under perfect competition and the international duopoly, in which both governments strategically use policies toward compatibility but cannot use conventional trade policies. In both cases, the equilibrium outcome of the non-cooperative game depends upon the strength of the network externality effect and involves either an excessively high equilibrium level of compatibility (in combination with either too much or too little trade) or very low equilibrium levels of both compatibility and trade. The paper concludes with the analysis of the international agreements on policies toward compatibility and evaluates the existing provisions in the WTO legal system aimed at minimizing the trade-inhibiting impact of standards and regulations in the area of technical compatibility.
- Recurrent Trade Agreements and the Value of External Enforcement
In: Journal of International Economics [Peer Reviewed]
Date: March 2008
This paper presents a theory of dynamic trade agreements in which external institutions, such as the WTO, play a central role in supporting credible enforcement. In our model, countries engage in ongoing negotiations, and, as a consequence, cooperative agreements become unsustainable in the absence of external enforcement institutions. By using mechanisms such as delays in dispute resolution and direct penalties, enforcement institutions can restore incentives for cooperation, despite the lack of coercive power. The occurrence of costly trade disputes, and the feasibility of mechanisms such as escape clauses, depend on the degree to which enforcement institutions can verify, and condition on, events that may lead to trade disputes.
- Technical Compatibility and the Mode of Foreign Entry with Network Externalities
In: Canadian Journal of Economics [Peer Reviewed]
Date: February 2007
We examine the preferences of a foreign firm and a local government over two modes of foreign direct investment: de novo entry and acquisition of the domestic incumbent. Two crucial features of the model are network externalities and partial incompatibility between the domestic and the foreign technology. The relative welfare impact of the two entry modes depends on the degree of market competition and the strength of the network externality. The clash between the foreign firm's choice and the local government's ranking of the two entry modes can motivate limits on the degree of foreign ownership of the local firm.
- Industrial Targeting, Experimentation and Long-Run Specialization
In: Journal of Development Economics [Peer Reviewed]
Date: February 2004
This paper emphasizes the experimental nature of industrial targeting policies under uncertainty in a small open economy. A government promotes entry of new firms in selected industries and updates its beliefs about the country's comparative advantage in a Bayesian way. This selective targeting policy is analyzed in the framework of a special type of statistical decision problem known as the multi-armed bandit. The paper analyzes how the costs and benefits of learning about a country's comparative advantage depend on the characteristics of the targeted industries. The framework suggests that even an optimally designed industrial targeting policy may eventually steer the country away from specializing according to its true comparative advantage.
- Trade Interdependence, the International Financial Institutions, and the Recent Evolution of Sovereign-Debt Renegotiations
In: Journal of International Economics [Peer Reviewed]
Date: October 2002
This paper analyzes the effect of a debtor country’s pattern of trade with commercial creditors’ home countries on the outcome of debt-rescheduling negotiations. The analysis reveals that a debtor country with more market power has greater leverage in a three-way debt-rescheduling negotiation that includes the debtor country, its creditors and the International Financial Institutions (IFIs). The paper also considers the effects of the IFI sovereign-debt policy on the bargaining power of the parties in debt-rescheduling negotiations. Two bargaining frameworks analyzed and compared in the paper represent the negotiation mechanism at different stages of the IFI sovereign-debt policy evolution.
Recent Publications
Journal Articles
- Global Digital Platforms, Technology Transfer and FDI Policies in Two-Sided Markets
In: Economic Inquiry [Peer Reviewed]
Date: February 2023
This paper is motivated by the growing on-line trade and foreign direct investment (FDI) in e-commerce platforms such as Amazon, E-Bay, and Expedia. Using a two-sided markets model, we examine the preferences of a foreign firm and a host country government over two modes of FDI: de novo entry (through the establishment of a new platform) and acquisition of the domestic incumbent platform. Key elements in the model, are technology transfer, cross-side network externalities and platform service differentiation, which determine the ranking of the host country welfare gains and the entrant’s profits under the two entry modes. In the case where the foreign entrant and the host government disagree over the entry modes ranking, asymmetric foreign equity restrictions can induce the welfare-optimal choice of the entry mode by the foreign firm.