CASCADING CONTINGENT PROTECTION AND VERTICAL MARKET-STRUCTURE

Cascading contingent protection may occur when protection of an upstre am industry transfers injury to the downstream industry and increases the likelihood that this industry asks and receives protection. This p aper examines cascading protection within a sequential petitioning mod el where the upstream industry acts as leader. The analysis identifies market structure and the vertical linkage between the: upstream and t he downstream industry as important determinants of the occurrence of cascading protection. It is shown that the circumstances which make ca scading protection more likely to occur also make it more Likely that this protection has serious negative welfare consequences. (C) 1998 El sevier Science B.V. All rights reserved.