Sanctions
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. We find, in a game-theoretic framework, that, in order to extract concessions, the sender may not actually have to impose sanctions, but merely threaten to. How much the sender can extract depends on the cost of sanctions to both parties, even when they are not used in equilibrium.
Year of publication: |
1993-04
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Authors: | Eaton, Jonathan ; Engers, Maxim |
Institutions: | Institute for Economic Development, Department of Economics |
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