arXiv publishes paper on optimal trade sanctions theory in a multipolar world
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Jan Morgan and Anchi Xia have published a paper on arXiv on the theory of optimal trade sanctions in a multipolar world, constructing a three-party trade sanctions model consisting of a sanctioning party, a target party, and a neutral third party. The neutral third party can choose unilateral action or ally with either party while satisfying participation constraints. The model derives three core conclusions: alliance members typically set different tariffs under Stackelberg timing or imperfect transfers; the sanctioning party's welfare may exceed the optimal level under unilateral trade conditions when sanctions are tightened; and when the sanctioning party and the target party compete for the neutral third party's support, the feasible range of sanction targets can be clarified. A calibration analysis of the model for Russian crude oil sanctions shows that if China and India take unilateral action or the sanctioning alliance offers better terms, the effectiveness of sanctions can be improved by about 70%.
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- arXiv q-finSanctions in a Multipolar World: The Role of Neutral Third Parties
The paper constructs a three-party theoretical model of trade sanctions involving the sanctioning party, the target party, and a neutral third party, deriving three core conclusions: alliance members typically set different tariffs under Stackelberg timing or imperfect transfer payments; as sanctions tighten, the sanctioning party's welfare may exceed the optimal level under unilateral terms of trade; and when the sanctioning party and the target party compete for the support of a neutral third party, the feasible range of sanctions targets can be clearly defined. The model is applied to a calibrated analysis of sanctions on Russian crude oil, showing that if China and India take unilateral action or the sanctioning alliance offers better terms, the effectiveness of sanctions can increase by approximately 70%.
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