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A Theory of Economic Sanctions

Author

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  • Han , Baran

    (KDI School of Public Policy and Management)

Abstract

This paper presents a work-horse model to analyze the mechanism of triadic sanctions, where the receiver of the sanction is not the actual target. With a motivating example of the US sanctions against Iran and a simple game theoretic framework, we show that the threat of such sanction is not credible in situations where the game ends after single stage, or when the entities are not concerned with future transactions amongst each other. In a repeated game setting, on the other hand, the threats become credible, but the level of enforcement would differ across firms/countries depending on the economic interdependency and how the parties perceive the probability that the games would continue to the next period.

Suggested Citation

  • Han , Baran, 2012. "A Theory of Economic Sanctions," Working Papers 12-3, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepwp:2012_003
    DOI: 10.2139/ssrn.2836819
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    Cited by:

    1. Rogov Mikhail I., 2016. "International Economic Sanctions:Analyses Of The Case With Russia In 2014," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 2, August.

    More about this item

    Keywords

    Iran Sanctions; Triadic Sanctions;

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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