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Cascading Contigent Protection and Vertical Market Structure

Author

Listed:
  • Rene Belderbos
  • Clive Jie a Joen
  • Leo Sleuwaegen

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.

Suggested Citation

  • Rene Belderbos & Clive Jie a Joen & Leo Sleuwaegen, 1995. "Cascading Contigent Protection and Vertical Market Structure," Discussion Paper Series a310, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hituec:a310
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    Cited by:

    1. is not listed on IDEAS
    2. 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.
    3. repec:qua:journl:v:9:y:2012:i:2:p:7-28 is not listed on IDEAS
    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. 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.
    7. 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.
    8. repec:qua:journl:v:6:y:2009:i:1:p:59-64 is not listed on IDEAS
    9. 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.
    10. 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.
    11. Sebastián Bustos & Miguel Ángel Santos, 2025. "Beneficiation vs. Knowledge-based: Dead ends and steppingstones to productive diversification," Working Paper Series of the School of Government and Public Transformation 13, School of Government and Public Transformation, Tecnológico de Monterrey.
    12. 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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    Keywords

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    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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