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Capturing Strategic Rent: Full-Line Forcing, Brand Discounts, Aggregate Rebates, and Maximum Resale Price Maintenance

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  • Shaffer, Greg

Abstract

This paper examines the implications of a retailer's shelf space stocking decisions on the optimal marketing strategy of an upstream multiproduct monopolist. When the retailer's opportunity cost of shelf space is known, full-line forcing, brand discounts, and maximum resale price maintenance are sufficient to achieve the monopolist manufacturer's first best profit. When these strategies are adopted, the retailer's profit is reduced to the scarcity rents obtainable on her shelf space. When the retailer's opportunity cost of shelf space is unknown, the use of aggregate rebates can act as a screening device to maximize channel profit. Copyright 1991 by Blackwell Publishing Ltd.

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  • Shaffer, Greg, 1991. "Capturing Strategic Rent: Full-Line Forcing, Brand Discounts, Aggregate Rebates, and Maximum Resale Price Maintenance," Journal of Industrial Economics, Wiley Blackwell, vol. 39(5), pages 557-575, September.
  • Handle: RePEc:bla:jindec:v:39:y:1991:i:5:p:557-75
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    Cited by:

    1. Rafael Moner‐Colonques & José J. Sempere‐Monerris & Amparo Urbano, 2011. "Product Line Choice in Retail Duopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 777-802, September.
    2. Dertwinkel-Kalt, Markus & Wey, Christian, 2020. "Multi-product bargaining, bundling, and buyer power," Economics Letters, Elsevier, vol. 188(C).
    3. Cornière (de), Alexandre & Taylor, Greg, 2017. "Upstream Bundling and Leverage of Market Power," TSE Working Papers 17-827, Toulouse School of Economics (TSE), revised Oct 2019.
    4. Mauleon, Ana & Sempere-Monerris, Jose J. & Vannetelbosch, Vincent J., 2011. "Networks of manufacturers and retailers," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 351-367, March.
    5. Doh-Shin Jeon & Domenico Menicucci, 2012. "Bundling and Competition for Slots," American Economic Review, American Economic Association, vol. 102(5), pages 1957-1985, August.
    6. Thibaud Verge, 2002. "Portfolio Analysis in European Merger Control: An Economic Analysis," The Centre for Market and Public Organisation 02/046, The Centre for Market and Public Organisation, University of Bristol, UK.
    7. Christopher T. Conlon & Julie Holland Mortimer, 2013. "Efficiency and Foreclosure Effects of Vertical Rebates: Empirical Evidence," NBER Working Papers 19709, National Bureau of Economic Research, Inc.
    8. Thibaud Vergé, 2003. "Portfolio Effects and Merger Control: Full-line Forcing as an Entry Deterrence Strategy," Industrial Organization 0301010, University Library of Munich, Germany.
    9. Gabrielsen, Tommy Staahl, 1997. "Equilibrium retail distribution systems," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 105-120, November.
    10. Lan Luo & P. K. Kannan & Brian T. Ratchford, 2007. "New Product Development Under Channel Acceptance," Marketing Science, INFORMS, vol. 26(2), pages 149-163, 03-04.
    11. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: Sequential Pricing," IDEI Working Papers 576, Institut d'Économie Industrielle (IDEI), Toulouse.
    12. Robert Innes & Stephen F. Hamilton, 2009. "Vertical restraints and horizontal control," RAND Journal of Economics, RAND Corporation, vol. 40(1), pages 120-143, March.
    13. Doh-Shin Jeon & Domenico Menicucci, 2009. "Bundling and competition for slots: On the portfolio effects of bundling," Economics Working Papers 1152, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2009.
    14. Mazur Karolina, 2013. "Isolating mechanisms as sustainability factors of resource-based competitive advantage," Management, Sciendo, vol. 17(2), pages 31-46, December.
    15. Li, Anqi & Xing, Yiqing, 2020. "Intermediated implementation," European Economic Review, Elsevier, vol. 123(C).
    16. Tongil “TI”Kim, 2021. "When Franchisee Service Affects Demand: An Application to the Car Radiator Market and Resale Price Maintenance," Marketing Science, INFORMS, vol. 40(1), pages 101-121, January.
    17. Bogdan Genchev & Julie Holland Mortimer, 2016. "Empirical Evidence on Conditional Pricing Practices," NBER Working Papers 22313, National Bureau of Economic Research, Inc.
    18. Eduard Stoppel & Stefan Roth, 2017. "The conceptualization of pricing schemes: From product-centric to customer-centric value approaches," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(1), pages 76-90, February.
    19. José J. Sempere Monerris & Rafael Moner Colonques & Amparo Urbano, 2001. "Equilibrium Distribution Systems Under Retailers' Strategic Behavior," Working Papers. Serie AD 2001-01, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    20. Julie Mortimer & Christopher Conlon, 2014. "Efficiency and Foreclosure Effects of All-Units Discounts: Empirical Evidence," 2014 Meeting Papers 1177, Society for Economic Dynamics.

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