A theory of economic sanctions as terms-of-trade manipulation

John Sturm Becko

Journal of International Economics, 2024, vol. 150, issue C

Abstract: How can a country design economic sanctions to maximize their economic cost to the sanctioned country at the lowest cost to the sanctioner? I consider this problem from the perspective of international trade and draw a close connection between trade restrictions as economic sanctions and trade restrictions as terms-of-trade manipulation. This connection has useful implications for the design of trade taxes as sanctions: Small sanctions increase welfare in the sanctioning country. Sanctions target the same goods as terms-of-trade manipulation. Sanctions ignore elasticities of demand and supply in the sanctioning country.

Keywords: International trade sanctions; Trade policy; Terms-of-trade manipulation (search for similar items in EconPapers)
JEL-codes: F13 F51 H21 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:150:y:2024:i:c:s0022199624000229

DOI: 10.1016/j.jinteco.2024.103898

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