Optimal tariff versus optimal sanction : the case of European gas imports from Russia

Europe has set itself the aim of reducing its dependency on Russian gas imports. This note provides an economic analysis of a tariff on imports of natural gas into the EU which would help achieve this goal. The starting point is that Gazprom has a monopoly on exports of gas from Russia. Standard trade theory implies that even on purely economic grounds a tariff on Russian gas imports would be beneficial for Europe because it would lower the demand curve Gazprom faces and induce it to lower prices