How Should Sanctions Account for Bystander Countries?
AEA Papers and Proceedings
vol. 113,
May 2023
(pp. 39-42)
Abstract
Neutral "bystander countries" have profoundly shaped the impact of trade sanctions imposed on Russia following its invasion of Ukraine. How should sanctions account for the presence of such bystanders? I study this question in a simple trade model where a sanctioning country places tariffs on imports from a sanctioned country in the presence of a neutral third country. Optimal tariffs-as-sanctions are lower on goods that the sanctioner can import from bystanders. On goods that the sanctionee can export to bystanders, tariffs-as-sanctions are higher given an elasticity of (excess) supply to the sanctioner but lower given a total elasticity of supply.Citation
Sturm, John. 2023. "How Should Sanctions Account for Bystander Countries?" AEA Papers and Proceedings, 113: 39-42. DOI: 10.1257/pandp.20231044Additional Materials
JEL Classification
- F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 Trade Policy; International Trade Organizations
- F51 International Conflicts; Negotiations; Sanctions