IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Slotting Allowances and Conditional Payments

Listed author(s):
  • Patrick Rey


  • Jeanine Thal


  • Thibaud Vergé


We analyze the competitive effects of upfront payments made by manufacturers to retailersin a contracting situation where rival retailers offer contracts to a manufacturer. In contrast toBernheim and Whinston (1985, 1998), who study the situation in which competing manufacturersoffer contracts to a common retailer, we find that two-part tariffs (even if contingent onexclusivity or not) do not suffice to implement the monopoly outcome. More complex arrangementsare required to internalize all the contracting externalities. The retailers can for exampleachieve the monopoly outcome through (contingent) three-part tariffs that combine slotting allowances(i.e., upfront payments by the manufacturer) with two-part tariffs where the fees areconditional on actual trade. The welfare implications are ambiguous. On the one hand, slottingallowances ensure that no efficient retailer is excluded. On the other hand, they allow firms tomaintain monopoly prices in a common agency situation. Simulations suggest that the lattereffect is more significant.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: Crest working paper version
Download Restriction: no

Paper provided by Center for Research in Economics and Statistics in its series Working Papers with number 2006-23.

in new window

Length: 39
Date of creation: 2006
Handle: RePEc:crs:wpaper:2006-23
Contact details of provider: Postal:
Bâtiment ENSAE, 5 rue Henry LE Chatelier, 91120 Palaiseau

Phone: 01 41 17 60 81
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:crs:wpaper:2006-23. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sri Srikandan)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.