Fishing for Trouble The Impact of the 2014 Agricultural Embargo on Russian Consumer Welfare
Abstract
The use of trade sanctions has surged in recent decades as a means of deterrence and to prompt policy changes among nations. While research has predominantly focused on sanctions imposed by western countries, the exploration of trade sanctions as a retaliatory measure has been limited. However, following the Russian agricultural embargo of 2014, such measures have become increasingly common. This paper investigates the impact of unilateral trade sanctions on consumer welfare by studying the 2014 Russian agricultural embargo. Focusing on seafood exports to Russia before and after the embargo, we apply the theory of comparative advantage and utilize the work of Redding and Weinstein,2020 to assess the impact on consumer welfare through three hypotheses: price, quality composition, and variety. We employ a revised difference-in-differences approach with continuous treatment intensity, combined with high-dimensional fixed effects, to quantify the short term impact of the embargo. Our findings indicate that the embargo negatively impacted Russian consumer welfare through increased prices, decreased product variety, and reduced access to high-quality goods.