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Slotting Allowances and Scarce Shelf Space

Author

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  • Leslie M. Marx
  • Greg Shaffer

Abstract

"Slotting allowances are payments made by manufacturers to obtain retail shelf space. They are widespread in the grocery industry and a concern to antitrust authorities. A popular view is that slotting allowances arise because there are more products than retailers can profitably carry given their shelf space. We show that the causality can also go the other way: the scarcity of shelf space may in part be due to the feasibility of slotting allowances. It follows that slotting allowances can be anticompetitive even if they have no effect on retail prices". Copyright (c) 2010 Wiley Periodicals, Inc..

Suggested Citation

  • Leslie M. Marx & Greg Shaffer, 2010. "Slotting Allowances and Scarce Shelf Space," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 575-603, September.
  • Handle: RePEc:bla:jemstr:v:19:y:2010:i:3:p:575-603
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    Citations

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    Cited by:

    1. Gérard P. Cachon & A. Gürhan Kök, 2010. "Competing Manufacturers in a Retail Supply Chain: On Contractual Form and Coordination," Management Science, INFORMS, vol. 56(3), pages 571-589, March.
    2. Stéphane Caprice & Vanessa Schlippenbach, 2013. "One-Stop Shopping as a Cause of Slotting Fees: A Rent-Shifting Mechanism," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(3), pages 468-487, September.
    3. Katherine Ho & Justin Ho & Julie Holland Mortimer, 2012. "The Use of Full-Line Forcing Contracts in the Video Rental Industry," American Economic Review, American Economic Association, vol. 102(2), pages 686-719, April.
    4. Pio Baake & Vanessa Schlippenbach, 2014. "The Impact of Upfront Payments on Assortment Decisions in Retailing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(1), pages 95-111, February.
    5. Seaton, Jonathan S. & Waterson, Michael, 2013. "Identifying and characterising price leadership in British supermarkets," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 392-403.
    6. Claire Chambolle & Sofia Villas-Boas, 2007. "Buyer Power through Producer's Differentiation," Working Papers hal-00243058, HAL.
    7. Yaron Yehezkel, 2014. "Motivating a Supplier to Test Product Quality," Journal of Industrial Economics, Wiley Blackwell, vol. 62(2), pages 309-345, June.
    8. E. Bacchiega & O. Bonroy & E. Petrakis, 2016. "Contract contingency in vertically related markets," Working Papers wp1079, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. Christian Trudeau & Zheng Wang, 2017. "Should the most efficient firm invest in its capacity? A value capture approach," Working Papers 1706, University of Windsor, Department of Economics.
    10. Chambolle, Claire & Villas-Boas, Sofia B., 2015. "Buyer power through the differentiation of suppliers," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 56-65.
    11. Jin‐Hyuk Kim, 2014. "Employee Poaching: Why It Can Be Predatory," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(5), pages 309-317, July.
    12. Kjetil Bjorvatn & Anna B. Milford & Lars Sørgard, 2015. "Farmers, Middlemen and Exporters: A Model of Market Power, Pricing and Welfare in a Vertical Supply Chain," Review of Development Economics, Wiley Blackwell, vol. 19(1), pages 31-44, February.

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