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Sanctions

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  • Jonathan Eaton
  • Maxim Engers

Abstract

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.

Suggested Citation

  • Jonathan Eaton & Maxim Engers, 1993. "Sanctions," Boston University - Institute for Economic Development 14, Boston University, Institute for Economic Development.
    • Handle: RePEc:fth:bosecd:14
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Bulow, Jeremy & Rogoff, Kenneth, 1989. "A Constant Recontracting Model of Sovereign Debt," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 155-178, February.
    3. Farrell, Joseph & Maskin, Eric, 1989. "Renegotiation in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 327-360, December.
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    5. Eaton, Jonathan & Engers, Maxim, 1990. "Intertemporal Price Competition," Econometrica, Econometric Society, vol. 58(3), pages 637-659, May.
    6. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-252, March.
    7. R. M. Cyert & M. H. DeGroot, 1970. "Multiperiod Decision Models with Alternating Choice as a Solution to the Duopoly Problem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 410-429.
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    Cited by:

    1. Brian D. Wright & Kenneth M. Kletzer, 2000. "Sovereign Debt as Intertemporal Barter," American Economic Review, American Economic Association, vol. 90(3), pages 621-639, June.
    2. Maxim Engers & Jonathan Eaton, 1999. "Sanctions: Some Simple Analytics," American Economic Review, American Economic Association, vol. 89(2), pages 409-414, May.

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