Sanctions, sanctions-busting, and secondary sanctions: A game-theoretic analysis

One of the reasons why economic sanctions fail to achieve their objective is sanctions-busting—where the target country engages in transactions with third parties to counter the effect of sanctions. Sanctions-busting has not been captured by existing theoretical models of sanctions. Developed here is a game-theoretic model of the sanctions-busting game between the third party and the target by accounting for the costs and benefits for all three players in the triad. A full range of equilibria consistent with actual sanctions episodes are obtained.