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Slotting allowances and price-cost margins: A note

Author

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  • Azzeddine M. Azzam;

    (103 Filley Hall, Department of Agricultural Economics,, University of Nebraska-Lincoln, Lincoln, NE 68583-0922., E-mail: aazzam1@unl.edu)

Abstract

It has become common practice for retail grocers to charge grocery manufacturers a slotting allowance for placing products on the retail shelf. Manufacturers view the allowance as anti-competitive. Retailers view it as compensation for the risks associated with stocking new products. The largely theoretical literature on the subject is consistent with both views. This article proposes an empirical model to test the effect of slotting allowances on performance, and discusses if and how the model can be tied to the qualitative predictions of existing theoretical literature. [JEL classification: L100, L140, L420] © 2001 John Wiley & Sons, Inc.

Suggested Citation

  • Azzeddine M. Azzam;, 2001. "Slotting allowances and price-cost margins: A note," Agribusiness, John Wiley & Sons, Ltd., vol. 17(3), pages 417-422.
  • Handle: RePEc:wly:agribz:v:17:y:2001:i:3:p:417-422
    DOI: 10.1002/agr.1025
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    References listed on IDEAS

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    1. Lukacs, Peter, 1997. "Input contracts, market structure and the empirical specification of price cost margins," Economics Letters, Elsevier, vol. 55(1), pages 139-143, August.
    2. Greg Shaffer, 1991. "Slotting Allowances and Resale Price Maintenance: A Comparison of Facilitating Practices," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 120-135, Spring.
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    Cited by:

    1. Herrmann, Roland & Moser, Anke & Werner, Elke, 2002. "Neue empirische Befunde zur Preissetzung und zum Verbraucherverhalten im Lebensmitteleinzelhandel," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 51(2).
    2. Ian Sheldon & Richard Sperling, 2003. "Estimating the Extent of Imperfect Competition in the Food Industry: What Have We Learned?," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 89-109.
    3. Geng, Qin & Minutolo, Marcel C., 2010. "Failure fee under stochastic demand and information asymmetry," International Journal of Production Economics, Elsevier, vol. 128(1), pages 269-279, November.
    4. Rennhoff, Adam D., 2004. "Paying For Shelf Space: An Investigation Of Merchandising Allowances In The Grocery Industry," Research Reports 25155, University of Connecticut, Food Marketing Policy Center.

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