The Dynamics of Evasion: The Price Cap on Russian Oil Exports and the Amassing of the Shadow Fleet

Diego Cardoso, Stephen W. Salant, Julien Daubanes and Julien Xavier Daubanes
Authors registered in the RePEc Author Service: Julien Daubanes ()

No 11618, CESifo Working Paper Series from CESifo

Abstract: To reduce funds for Russia’s Ukraine invasion, Western governments imposed a price ceiling on Russian seaborne oil exports using Western services. To sell above that ceiling, Russia developed a “shadow fleet” which uses no such services. We use a calibrated model driven by this fleet’s expansion to assess various sanctions. While all sanctions reduce the present value of Russia’s profits, we find that the tighter the ceiling and the tighter the enforcement, the less harm sanctions impose, contradicting conventional wisdom based on Hotelling lemma. However, policies to reduce the shadow fleet’s size may increase the sanction’s effectiveness.

Keywords: economic warfare; sanctions evasion; Hotelling’s lemma (search for similar items in EconPapers)
JEL-codes: D04 L51 Q41 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cis, nep-ene, nep-int and nep-tra
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11618

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