Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314657 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 11618
Publisher: 
CESifo GmbH, Munich
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.
Subjects: 
economic warfare
sanctions evasion
Hotelling's lemma
JEL: 
D04
L51
Q41
Document Type: 
Working Paper
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