In the public debate it is sometimes implicitly assumed that it is the receiver who accrues any welfare losses when there is an embargo. The receiver is considered to be ‘punished’ by the sender. This, however, is incorrect. If we assume that there is trade between two countries in a pareto optimal situation, it is clear that both countries will incur welfare losses as a result of a total embargo. In general, then, we assume that the sending country will voluntarily lower its level of welfare in order to lower the welfare of the receiving country. Where a large number of countries impose an embargo, the costs of the export restrictions are shared by all senders.