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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 (American Journal of Agricultural Economics, 89, 2007, 338). 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 an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.© 2023 The Authors. The World Economy published by John Wiley & Sons Ltd.
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

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