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Cascading contingent protection and vertical market structure

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  • Sleuwaegen, Leo
  • Belderbos, Rene
  • Jie-A-Joen, Clive

Abstract

Cascading contingent protection may occur when protection of an upstream industry transfers injury to the downstream industry and increases the likelihood that this industry asks and receives protection. This paper shows that the political economy of cascading contingent protection can be represented by a sequential bidding game in expected payoffs where the upstream industry acts as a Stackelberg leader. A simple model of competition in, and vertical linkage between, an upstream and downstream industry is developed to examine in which type of industries cascading contingent protection is most likely to occur. Analysis of welfare effects shows that the circumstances which make cascading protection more likely to occur, also make it more likely that it has serious negative welfare consequences.
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Suggested Citation

  • Sleuwaegen, Leo & Belderbos, Rene & Jie-A-Joen, Clive, 1998. "Cascading contingent protection and vertical market structure," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 697-718, November.
    • Handle: RePEc:eee:indorg:v:16:y:1998:i:6:p:697-718
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    References listed on IDEAS

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    1. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Paper 517, Economics Department, Queen's University.
    2. Abiru, Masahiro, 1988. "Vertical Integration, Variable Proportions and Successive Oligopolies," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 315-325, March.
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    Cited by:

    1. Regina M. Abrami & Yu Zheng, 2010. "The New Face of Chinese Industrial Policy: Making Sense of Anti-Dumping Cases in the Petrochemical and Steel Industries," Harvard Business School Working Papers 11-042, Harvard Business School.
    2. Amy J. Glass & Kamal Saggi, 2005. "Exporting versus Direct Investment under Local Sourcing," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(4), pages 627-647, December.
    3. Ian Sheldon & Steve McCorriston, 2012. "Climate policy and border tax adjustments: Might industrial organization matter?," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 9(2), pages 7-28, Julio-Dic.
    4. Belderbos, R. & Vandenbussche, H. & Veugelers, R., 2004. "Antidumping duties, undertakings, and foreign direct investment in the EU," European Economic Review, Elsevier, vol. 48(2), pages 429-453, April.
    5. Erbahar, Aksel & Zi, Yuan, 2017. "Cascading trade protection: Evidence from the US," Journal of International Economics, Elsevier, vol. 108(C), pages 274-299.
    6. Maxwell T. Andersen & Robert M. Feinberg, 2018. "Fishing Downstream Revisited: A Multi-country Analysis of Antidumping Patterns," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 18(2), pages 1-9, June.
    7. Aksel Erbahar & Yuan Zi, 2015. "Cascading Trade Protection: Theory and Evidence from the U.S," CTEI Working Papers series 04-2015, Centre for Trade and Economic Integration, The Graduate Institute.
    8. Ian M. Sheldon & Steve McCorriston, 2009. "Tariff De-escalation with successive oligopoly: Implications for developing country market access," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 6(1), pages 59-64, Julio - D.
    9. Sonali Deraniyagala & Ben Fine, 2000. "New Trade Theory Versus Old Trade Policy: A Continuing Enigma," Working Papers 102, Department of Economics, SOAS University of London, UK.
    10. Belderbos, Rene & Vandenbussche, Hylke & Veugelers, Reinhilde, 1999. "Undertakings and Antidumping Jumping FDI in Europe," CEPR Discussion Papers 2320, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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