How can a country design economic sanctions to maximize their economic cost to the sanctioned country at the lowest cost to the sanctioner? I consider this problem from the perspective of international trade and draw a close connection between trade restrictions as economic sanctions and trade restrictions as terms-of-trade manipulation. This connection has useful implications for the design of trade taxes as sanctions: Small sanctions increase welfare in the sanctioning country. Sanctions target the same goods as terms-of-trade manipulation. Sanctions ignore elasticities of demand and supply in the sanctioning country.
CITATION STYLE
Becko, J. S. (2024). A theory of economic sanctions as terms-of-trade manipulation. Journal of International Economics, 150. https://doi.org/10.1016/j.jinteco.2024.103898
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