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Bystander on the Fence: Sanctions in a Multipolar World

Jan Morgan, Anchi Xia · 2026 · arXiv (Cornell University)

DOI: 10.48550/arxiv.2610.22830 · cited by 0 works (OpenAlex) · open-access PDF

French

Nous fournissons une théorie des sanctions commerciales optimales avec trois acteurs stratégiques: Home (sanctioner), Foreign (target), et Bystander. Bystander peut agir unilatéralement ou en alliance avec l'une des parties sous réserve d'une contrainte de participation. Nous dérivons de trois nouveaux résultats. Premièrement, les membres d'une coalition fixent généralement des tarifs différents soit sous le timing de Stackelberg, soit lorsque les transferts sont imparfaits. Deuxièmement, à mesure que les sanctions s'intensifient, le bien-être de Home peut s'améliorer même au-delà des conditions unilatérales-optimales du commerce en raison d'interactions stratégiques. Troisièmement, nous caractérisons des objectifs de sanctions fais

Machine translation (Meta M2M100); the English original follows.

Abstract

We provide a theory of optimal trade sanctions with three strategic players: Home (sanctioner), Foreign (target), and Bystander. Bystander may act unilaterally or ally with either party subject to a participation constraint. We derive three novel results. First, members of a coalition generically set different tariffs either under Stackelberg timing or when transfers are imperfect. Second, as sanctions tighten, Home's welfare can improve even beyond the unilateral terms-of-trade optimum due to strategic interactions. Third, we characterize feasible sanctions targets when Home and Foreign compete for Bystander's support. An alternative implementation arises with competition: Home lets Foreign win, but Foreign's transfer to Bystander implements the sanctions target. We apply our model to sanctions against Russian crude. In a calibration exercise, cooperation among India, China, and Russia best matches observed data. Sanctions could have been roughly 70% more effective had China and India acted unilaterally or had the sanctioning coalition made them a better offer.

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Topics: Sanctions, Stackelberg competition, Bystander effect, Foreign policy, Welfare, China

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