Economic sanctions as deterrents and constraints
| Published date | 01 July 2023 |
| DOI | http://doi.org/10.1177/00223433221088323 |
| Author | Tyler Kustra |
| Date | 01 July 2023 |
| Subject Matter | Regular Articles |
Economic sanctions as deterrents
and constraints
Tyler Kustra
University of Nottingham
Abstract
This article analyses economic sanctions starting from the perspective of a target that has to allocate its income
between spending on resources to pursue a contentious policy and consumption goods. By studying the target’s
consumption problem, it demonstrates how sanctions could backfire causing the target to shift its spending to
resources to pursue the contentious policy, thereby increasing the severity of the policy. Whether this will come to
pass depends on the elasticities of substitution, which are determined by the target’s utility function. Therefore, even
sanctions that seem like they could do no harm, such as embargoes on luxury goods consumed by only the target’s
dictator, could aggravate the level of the policy given the right utility function. Considering the target’s consumption
problem also illustrates how sanctions could (depending on the form of the target’s utility function) reduce the
resources it could allocate to pursuing the contentious policy, thereby moderating it. If the benefits of this constraint
outweigh the costs of sanctions to the sender, it could be in the sender’s best interest to impose sanctions. In these
cases articulating a demand and waiting for the target to consider it would simply provide the target with additional
time to continue the contentious policy, so the sender would impose constraining sanctions without warning.
Constraining sanctions, therefore, provide an explanation for sanctions imposed without a threat stage. Constraining
sanctions can occur even with complete and perfect information and may persist indefinitely, explaining the existence
of long-term costly sanctions as well as sanctions that occur in cases of full information.
Keywords
costly conflict, deterrence, economic sanctions, game theory, threat stage
Introduction
Kim Jung-Un is a horrible human being. A despot
known for his taste in fine wines, he runs a police state
with rampant malnutrition and a GDP per capita of just
$1,700 per year (Sims, 2016; FAO, 2017; CIA, 2018).
According to the United Nations, his human rights vio-
lations have no parallel in the modern world (UN
Human Rights Council, 2014), and his pursuit of
nuclear weapons could lead to a catastrophic war that
would kill millions.
I propose that, depending on his utility function, it
may be in the best interests of the United States to revise
its sanctions on North Korea to allow Kim to purchase as
many luxury goods as his heart desires. That such a
statement seems to be folly is a result of an unexamined
belief that the only purpose of sanctions is to punish the
target’s government with a sufficiently strong penalty
that it will be deterred from pur suing its contentious
policy, and therefore the sender should employ the sever-
est sanctions possible in order to convince the target to
change its ways.
This belief stems from the idea that the target pas-
sively accepts the punishment. Previous models of eco-
nomic sanctions tend to assume that the target receives a
fixed amount of utility from pursuing the policy
(Drezner, 2003). Sanctions lower the target’s utility by
a certain amount. If this amount is greater than the utility
the target received from pursuing the policy, sanctions will
deter the target from continuing with it. If the amount is
Corresponding author:
tylerkustra@gmail.com, www.tylerkustra.com
Journal of Peace Research
2023, Vol. 60(4) 649–660
ªThe Author(s) 2022
Article reuse guidelines:
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DOI: 10.1177/00223433221088323
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