Sanctions are measures that one party (the sender) takes to influence the actions of another (the target). Sanctions, or the threat of sanctions, have been used, for example, by creditors to get a foreign sovereign to repay debt, or by one government to influence the human rights, trade, or foreign policies of another government. We find, in a game-theoretic framework, that, in order to extract concessions, the sender may not actually have to impose sanctions, but merely threaten to. How much the sender can extract depends on the cost of sanctions to both parties, even when they are not used in equilibrium.
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Article
Eaton, Jonathan & Engers, Maxim, 1992.
"Sanctions,"
Journal of Political Economy,
University of Chicago Press, vol. 100(5), pages 899-928, October.
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Paper
Eaton, J. & Engers, M., 1990.
"Sanctions,"
Papers
221, Osaka - Institute of Social and Economic Research.
Jonathan Eaton & Maxim Engers, 1990.
"Sanctions,"
NBER Working Papers
3399, National Bureau of Economic Research, Inc.
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