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Sanctions

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Author Info
Jonathan Eaton
Maxim Engers

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Abstract

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. Sanctions can harm the sender as well as the target. The credibility of such sanctions is thus at issue. We examine, in a game-theoretic framework, whether sanctions that harm both parties enable the sender to extract concessions. We find that they can, and that their thrust alone can suffice when they are contingent on the target's subsequent behavior. Even when sanctions are not used in equilibrium, however, how much compliance they can extract typically depends upon the coats that they would impose on each party.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3399.

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Date of creation: Jul 1990
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Handle: RePEc:nbr:nberwo:3399

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  2. Cyert, Richard M & DeGroot, M H, 1970. "Multiperiod Decision Models with Alternating Choice as a Solution to the Duopoly Problem," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 410-29, August. [Downloadable!] (restricted)
  3. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-39, May. [Downloadable!] (restricted)
  4. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-52, March. [Downloadable!] (restricted)
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  5. Farrell, Joseph & Maskin, Eric, 1989. "Renegotiation in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 327-360, December. [Downloadable!] (restricted)
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  6. Eaton, Jonathan & Engers, Maxim, 1990. "Intertemporal Price Competition," Econometrica, Econometric Society, vol. 58(3), pages 637-59, May. [Downloadable!] (restricted)
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  7. Bulow, Jeremy & Rogoff, Kenneth, 1989. "A Constant Recontracting Model of Sovereign Debt," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 155-78, February. [Downloadable!] (restricted)
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  1. Kenneth M. Kletzer & Brian D. Wright, 2000. "Sovereign Debt as Intertemporal Barter," American Economic Review, American Economic Association, vol. 90(3), pages 621-639, June. [Downloadable!] (restricted)
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  2. Jonathan Eaton & Maxim Engers, 1999. "Sanctions: Some Simple Analytics," American Economic Review, American Economic Association, vol. 89(2), pages 409-414, May. [Downloadable!] (restricted)
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