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Slotting Allowances and Buy-Back Clauses

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Author Info
Gabrielsen, Tommy Staahl

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Abstract

In this paper we investigate some of the most frequent arguments for the use of slotting allowances. It has been claimed that slotting allowances can be profitability used to increase retail profits at the cost of increasing consumer prices. A second argument is that slotting allowances can be used by producers of new product to signal the demand potential of their products. We find that in perfect information setting slotting allowances will never arise in equilibrium. Moreover, we question whether slotting allowances can serve as a signalling device. We argue that buy-back clauses are far better instruments to signal profitability of new product launches in the grocery sector.

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Publisher Info
Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24580.

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Date of creation: 2005
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Handle: RePEc:ags:eaae05:24580

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Related research
Keywords: Demand and Price Analysis; L12; L40;

References listed on IDEAS
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  1. Tommy Gabrielsen, 1996. "The foreclosure argument for exclusive dealing: The case of differentiated retailers," Journal of Economics, Springer, vol. 63(1), pages 25-40, February. [Downloadable!] (restricted)
  2. Gabrielsen, T.S., 1997. "Equilibrium Retail Distribution Systems," Norway; Department of Economics, University of Bergen 166, Department of Economics, University of Bergen.
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  3. B. Douglas Bernheim & Michael D. Whinston, 1998. "Exclusive Dealing," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 64-103, February. [Downloadable!] (restricted)
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  4. Gabrielsen, T.S. & Sorgard, L., 1999. "Discount Chains and Brand Policy," Norway; Department of Economics, University of Bergen 191, Department of Economics, University of Bergen.
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  5. Bonanno, Giacomo & Vickers, John, 1988. "Vertical Separation," Journal of Industrial Economics, Blackwell Publishing, vol. 36(3), pages 257-65, March. [Downloadable!] (restricted)
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This page was last updated on 2009-12-11.


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