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A Game-Theoretic Analysis of the Interaction Between Embargoes, Price Caps and Tariffs in EU-Russia Gas Trade

Ehrhart, Karl-Martin 1; Schlecht, Ingmar; Schmitz, Jan; Wang, Runxi ORCID iD icon 1
1 Institut für Volkswirtschaftslehre (ECON), Karlsruher Institut für Technologie (KIT)

Abstract (englisch):

Geopolitical tensions have put the use of strategic trade policy instruments back on the agenda of policy makers. In this paper we investigate the interaction of the threat and use of three unilateral trade policy instruments: embargoes, import price caps and tariffs. In a game-theoretic framework with different scenarios and game variants, we show that the strategic use of the right combination of the respective trade policy instruments can be used to achieve more desirable outcomes for the players. In our setup, a credible threat of a tariff supports the successful implementation of an import price cap. While the results can be generalised, we show the concrete functioning of the interplay of these strategic trade policy instruments in a hypothetical game of resumption of natural gas sales from Russia to the EU. Following the application to this example, we derive policy suggestions to improve the EU’s position in the specific game.


Verlagsausgabe §
DOI: 10.5445/IR/1000184227
Veröffentlicht am 09.01.2026
Cover der Publikation
Zugehörige Institution(en) am KIT Institut für Volkswirtschaftslehre (ECON)
Publikationstyp Zeitschriftenaufsatz
Publikationsmonat/-jahr 12.2024
Sprache Englisch
Identifikator ISSN: 1566-1679, 1573-7012
KITopen-ID: 1000184227
Erschienen in Journal of Industry, Competition and Trade
Verlag Springer
Band 24
Heft 1
Seiten 21
Vorab online veröffentlicht am 22.10.2024
Schlagwörter European union, Russia, Strategic interaction, Gas market, Energy policy, Game theory
Nachgewiesen in OpenAlex
Dimensions
Scopus
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