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Trade sanctions and international market integration: Evidence from the sanctions on Iranian methanol exports

Massol, O., Hache, E. & Banal-Estanol, A. (2023). Trade sanctions and international market integration: Evidence from the sanctions on Iranian methanol exports. The World Economy,

Abstract

This paper examines the impact of trade sanctions, imposed against large exporting nations, on the degree of spatial integration achieved between non-sanctioned importing markets. The analysis is conducted under a parity bounds framework based on Negassa and Myers (2007). We apply this model to investigate the effects of the 2012–2016 sanctions against Iran’s petrochemical exports on the main importing markets in Asia and we use it to measure the degrees of spatial integration attained outside and during the sanction period. Our findings document a complete reconfiguration of the spatial extent of the methanol markets. Outside of the sanction period, a high degree of market integration was achieved among the main Asian markets. In contrast, we observe the emergence of two little integrated market areas, China and India on one side and South Korea and South-East Asia on the other, when sanctions are imposed.

Publication Type: Article
Additional Information: This is the peer reviewed version of the following article: Massol, O., Hache, E. & Banal-Estanol, A. (2023). Trade sanctions and international market integration: Evidence from the sanctions on Iranian methanol exports. The World Economy, which has been published in final form at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9701. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
Publisher Keywords: Iran, sanctions, law of one price, market integration, methanol
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
J Political Science > JZ International relations
Departments: School of Policy & Global Affairs > Economics
[img] Text - Accepted Version
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