Distributional incidence across multiple equilibria in N-country trade networks

Determine which countries benefit and which countries suffer in terms of distributional outcomes across the multiple equilibria admitted by the generalized Mossay–Tabuchi N-country international trade model with a freeness-of-trade matrix, particularly for bipartite "anti-bloc" trade network configurations that arise in the presence of sanctions or geographic blockages.

Background

The paper generalizes Mossay and Tabuchi’s three-country model to an N-country setting where bilateral trade costs are captured by a freeness-of-trade matrix. It shows that for certain network geometries—especially bipartite trade structures with “anti-blocs”—the model may admit multiple equilibria, including perverse equilibria characterized by rent-seeking.

In discussing the implications for economic sanctions, the authors note that while they can characterize the existence of multiple equilibria and their perverse nature, they cannot specify which actors (senders, targets, or intermediary sanctions-busters) will gain or lose in distributional terms under these multiple equilibria. This unresolved question limits the ability to predict the distribution of welfare changes across countries.