Sanctions

50 Pages Posted: 29 Jun 2004 Last revised: 12 Dec 2008

See all articles by Jonathan Eaton

Jonathan Eaton

Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Maxim Engers

University of Virginia - Department of Economics

Date Written: July 1990

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

Eaton, Jonathan and Engers, Maxim P., Sanctions (July 1990). NBER Working Paper No. w3399. Available at SSRN: https://ssrn.com/abstract=285416

Jonathan Eaton (Contact Author)

Leonard N. Stern School of Business - Department of Economics ( email )

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HOME PAGE: http://www.econ.nyu.edu/user/eatonj/

National Bureau of Economic Research (NBER)

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Maxim P. Engers

University of Virginia - Department of Economics ( email )

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Charlottesville, VA 22904-4182
United States
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804-924-7659 (Fax)

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