Anton D. Lowenberg

Unilateral Versus Multilateral International Sanctions: A Public Choice Perspective

Multilateral economic sanctions can be expected to impose greater terms-of-trade effects on a target nation than unilateral sanctions. Yet despite their potential for greater economic damage, multilateral sanctions often are less effective in bringing about desired political results in the target. An interest-group model of endogenous policy suggests that multilateral sanctions can undermine the political effectiveness of opposition groups in the target country, or strengthen those groups supporting the objectionable policy of the ruling regime. Such perverse effects are due in part to the inability of multilateral coalitions to enforce cooperation among members, and to the appropriation of sanctions rents in the target country. Unilateral sanctions, however, imposed by a country with close ties to the target, are often effective in achieving their intended political objectives.

Instrument Choice and the Effectiveness of International Sanctions: A Simultaneous Equations Approach

The literature on economic sanctions suggests that the choice of policy instrument, for example trade sanctions, financial sanctions, or military intervention, is endogenous to the political process and, in particular, to the policy outcome sought by the sanctioner. But the choice of instrument also affects the outcome of the sanctions. Therefore, the sanctions policy outcome and the probabilities of the sanctioners adoption of different sanctions instruments are jointly determined. To capture this endogeneity, multivariate probit and logit models are estimated using data from Hufbauer, Schott & Elliott, with the random utilities to the sanctioner of choosing military action, trade sanctions, and financial sanctions as dependent variables. The expected probabilities of choosing these alternatives are then incorporated as explanatory variables in predicting the success of the sanctions in attaining their political objectives. This procedure generates simultaneous estimates of the determinants of both instrument choice and sanctions success. The empirical results indicate that military force is less likely to be used against an economically healthy and politically stable target than against a more vulnerable target. However, military action is encouraged by third-country assistance to the sanctioned country and by a high cost of sanctions to the sanctioner. Financial sanctions are more likely to be used against a target that receives third-country support but are less likely against an economically healthy country. Sanctions success is positively correlated with the degree of warmth in relations between sanctioner and target prior to the sanctions; negatively correlated with the size of the sanctioner relative to the target; and negatively correlated with the economic health and political stability of the target. There is no evidence that third-country assistance to the target diminishes the effectiveness of sanctions or that the cost of sanctions to either the target or the sanctioner has a strong effect on the sanctions outcome.

Divestment, investment sanctions, and disinvestment: an evaluation of anti-apartheid policy instruments

Pressure for divestment and mandatory disinvestment sanctions directed against South Africa are an instance of domestic interest groups in one country seeking policy change in another. The link from shareholder divestment to disinvestment by firms is tenuous, however (since South Africa-active firms do not seem to suffer as a consequence of divestment pressure), and legislated sanctions are likely to have unpredictable and sometimes perverse effects on the extent of apartheid practices.

Efficient constitution formation and maintenance: The role of “exit”

A constitution will create mutual gains for all parties only if it is negotiated within an environment in which all parties possess viable exit options. The availability of exit options can substitute for a veil of uncertainty, which is difficult to operationalize in real-world settings. An efficient constitution also will be self-enforcing if it contains rules and principles geared to support political and market competition in the post-constitutional society. Again, the notion of exit is a useful way to characterize this condition for constitutional maintenance.

Using threshold models to explain international relations

The outcome of political opposition or revolution is a public good, which suggests that free riding will diminish the effectiveness of these forms of collective action. The private gains from contributing to collective goals are increased, however, if individuals place some value on ideological conformity or group identity. Nevertheless, some external stimulus is often needed to set in motion a tendency toward social motivation that is strong enough to outweigh the free rider incentive. This paper investigates the extent to which international pressure and demonstration effects can serve to signal support for the objectives of domestic groups in a target country and thereby mobilize collective action in pursuit of their goals. It is of interest to know not only the extent to which inherent barriers to effective collective action are overcome by outside support, but also to show how foreign economic policy can have an impact on political processes in the target country even when that policy itself has minimal economic effects.

Regulatory barriers to entry in the healthcare industry: the case of alternative medicine

Abstract To the extent that alternative medicine offers a substitute for mainstream physician services, physicians’ incomes are reduced by the incursion of alternative providers into the medical marketplace. State regulations restricting the practice of alternative medicine create rents for physicians whose incomes are protected from competition with alternative providers. Focusing on homeopathy as representative of an alternative therapeutic that potentially substitutes for conventional medicine, a cross-state empirical analysis reveals that mainstream physicians’ incomes are higher in states with more restrictive regulations governing the practice of homeopathy. This finding suggests that regulatory barriers to alternative medicine are motivated more by the interests of orthodox physicians in seeking protection from competition than by the interests of consumers in quality assurance.

A Threshold Model of Electoral Policy and Voter Turnout

Voter turnouts differ significantly across societies, and in some polities voting is compulsory. To explain differences in voter turnout it is necessary first to explain the variation in compulsion policies that exists across societies. A threshold model of collective action is used to provide an explanation for compulsion policies, which are treated as endogenous. Governments and parties are viewed as “demanding” turnout as a means to enhance political support. This theory suggests that voter turnout is high, and possibly government mandated, in societies that have high levels of political polarization and that use proportional representation. The predictions of the theory are tested using cross-country data.

Professional versus consumer interests in regulation: the case of the US child care industry

Professional licensure benefits producers by creating entry barriers into the profession, but consumers might also gain if licensure induces producers to supply high levels of quality. Whether consumers or producers gain most form licensure can be determined by examining the effect of licensure requirements on aggregate consumption. This paper uses a cross-sectional model to estimate the relationship between variations in state licensure rules and consumption of child care services. The results suggest that professional interests, and not those of consumers, are dominant in the setting of regulatory standards for the US child care industry.

Constitutional environments and the contractual state: The cases of South Africa and Hong Kong ☆

Abstract An efficient constitutional environment, one that is conducive to the emergence of an optimal, self-enforcing contract, requires that the contracting parties possess good alternatives to the constitutional agreement toward which they are negotiating. Such an environment is crucial to ensure that the resulting constitution effectively constrains rent dissipation and regulation in the post-contractual society. The existing constitutional environments in both South Africa and Hong Kong are not favorable to the formation of an efficient contract. We suggest how the current constitutional processes in these countries might be altered to increase the likelihood of an efficient outcome.

A Public Choice Analysis of the Political Economy of International Sanctions

The notion that the causes and effects of international economic sanctions are channelled through domestic politics in both the sanctioning and target countries is certainly nothing new to the international relations literature. In identifying expressive as opposed to instrumental impacts, Galtung (1967) suggested that economic sanctions might be usefully viewed as political signaling devices. Lindsay (1986) discussed the symbolism of sanctions both in regard to domestic and international constituencies. More recently, Morgan and Schwebach (1996) have used a spatial bargaining model to show that sanctions can be successful in attaining their political objectives in the target country under certain circumstances if the sanctions impose significant costs on politically powerful segments of the target society.