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Sanctions

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  • Jonathan Eaton
  • Maxim Engers

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.

Suggested Citation

  • Jonathan Eaton & Maxim Engers, 1990. "Sanctions," NBER Working Papers 3399, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3399
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    References listed on IDEAS

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    Cited by:

    1. Brian D. Wright & Kenneth M. Kletzer, 2000. "Sovereign Debt as Intertemporal Barter," American Economic Review, American Economic Association, vol. 90(3), pages 621-639, June.
    2. Maxim Engers & Jonathan Eaton, 1999. "Sanctions: Some Simple Analytics," American Economic Review, American Economic Association, vol. 89(2), pages 409-414, May.

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