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The Dynamics of Evasion: The Price Cap on Russian Oil Exports and the Amassing of the Shadow Fleet

Author

Listed:
  • Diego S. Cardoso
  • Stephen W. Salant
  • Julien Daubanes
  • Julien Xavier Daubanes

Abstract

To reduce funds for Russia’s Ukraine invasion, Western governments imposed a price ceiling on Russian seaborne oil exports using Western services. To sell above that ceiling, Russia developed a “shadow fleet” which uses no such services. We use a calibrated model driven by this fleet’s expansion to assess various sanctions. While all sanctions reduce the present value of Russia’s profits, we find that the tighter the ceiling and the tighter the enforcement, the less harm sanctions impose, contradicting conventional wisdom based on Hotelling lemma. However, policies to reduce the shadow fleet’s size may increase the sanction’s effectiveness.

Suggested Citation

  • Diego S. Cardoso & Stephen W. Salant & Julien Daubanes & Julien Xavier Daubanes, 2025. "The Dynamics of Evasion: The Price Cap on Russian Oil Exports and the Amassing of the Shadow Fleet," CESifo Working Paper Series 11618, CESifo.
    • Handle: RePEc:ces:ceswps:_11618
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11618.pdf
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    Cited by:

    1. Jesús Fernández-Villaverde & Yiliang Li & Le Xu & Francesco Zanetti, 2025. "Charting the Uncharted: The (Un)Intended Consequences of Oil Sanctions and Dark Shipping," CESifo Working Paper Series 11684, CESifo.

    More about this item

    Keywords

    economic warfare; sanctions evasion; Hotelling’s lemma;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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