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How Much Do Counter-Sanctions Cost: Well-Being Analysis

N. Volchkova and P. Kuznetsova
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N. Volchkova: New Economic School, Moscow, Russia
P. Kuznetsova: nstitute for Social Analysis and Prediction at Russian Presidential Academy of National Economy and Public Administration (RANEPA), Moscow, Russia

Journal of the New Economic Association, 2019, vol. 43, issue 3, 173-183

Abstract: In this paper we provide a quantitative assessment of the consequences of countersanctions introduced by the Russian government in 2014 in response to sectoral restrictive measures initiated by a number of developed countries. Commodity groups that fell under countersanctions included meat, fish, dairy products, fruit and vegetables. Applying the basic partial equilibrium analysis to the data from several sources, including Rosstat, Euromonitor, UN Comtrade, industry reviews etc., we obtain that total consumers' loss in 2018 amounts to 445 bln Rub or 3000 Rub per year for each Russian citizen. Producers capture 84% of this amount, importers - 3%, while deadweight loss amounts to 13%. Trade diversion ensured substantial redistribution of market share to Belarus. The gain of Belarussian importers of dairy products and cheese is especially impressive - up to 90% of total importer's gains in these markets.

Keywords: counter-sanction; trade diversion; well-being analysis; consumer surplus; producer surplus; deadweight loss (search for similar items in EconPapers)
JEL-codes: D61 F13 F51 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.31737/2221-2264-2019-43-3-9

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Handle: RePEc:nea:journl:y:2019:i:43:p:173-183