Sanctions, Sales, and Stigma: A Tale on the Performance of International Brands in Russia

47 Pages Posted: 9 Jul 2024

See all articles by Alexandra Avdeenko

Alexandra Avdeenko

Center for Evaluation and Development; Heidelberg University; Centre for Economic Policy Research (CEPR)

Maximilian Kaiser

University of Hamburg

Krisztina Kis-Katos

University of Göttingen

Leonie Reher

University of Göttingen

Abstract

The Russian invasion of Ukraine in February 2022 posed a dilemma for many international brands: withdraw from the Russian market for reputational concerns or stay to make profits. We study this trade-off using novel, detailed information on customer transactions of 95 global brands from 1,774 webshops that act as intermediaries. Using DiD specifications, we compare the weekly performance of brand-specific purchases of Russian and non-Russian customers before and after February 24, 2022. We document an immediate drop in sales of global brands to Russian customers by about 19%, accompanied by increases in the average price of these products by about 29%, resulting in stable revenues from the Russian market. Given that none of the scrutinized brands faced direct sanctions, the e-commerce decline likely results from reputation concerns. Our results support this interpretation: especially brands under less public scrutiny see revenue increases in Russia, which provides policy insights for sanction design.

Keywords: international sanctions, war, online purchases, e-commerce, Russia

Suggested Citation

Avdeenko, Alexandra and Kaiser, Maximilian and Kis-Katos, Krisztina and Reher, Leonie, Sanctions, Sales, and Stigma: A Tale on the Performance of International Brands in Russia. Available at SSRN: https://ssrn.com/abstract=4889116 or http://dx.doi.org/10.2139/ssrn.4889116

Alexandra Avdeenko

Center for Evaluation and Development ( email )

O7, 3
Mannheim, 68161
Germany

Heidelberg University ( email )

Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Maximilian Kaiser

University of Hamburg

Krisztina Kis-Katos (Contact Author)

University of Göttingen ( email )

Leonie Reher

University of Göttingen ( email )

Wilhelmsplatz 1
Göttingen, 37073
Germany

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