Slotting allowances and optimal product variety

Shaffer, Greg (2005) Slotting allowances and optimal product variety. Advances in Economic Analysis and Policy, 5 (1).

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Some commentators believe that slotting allowances enhance social welfare by providing retailers with an efficient way to allocate scarce retail shelf space. The claim is that, by offering their shelf space to the highest bidders, retailers act as agents for consumers and ensure that only the most socially desirable products obtain distribution. I show that this claim does not hold in a model in which a dominant firm and competitive fringe compete for retailer patronage. By using slotting allowances to bid up the price of shelf space, the dominant firm can sometimes exclude the competitive fringe even when welfare would be higher if the fringe obtained distribution. Copyright © 1999-2005 Internet-Journals, Inc. All rights reserved.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > Norwich Business School
Depositing User: Nicola Secker
Date Deposited: 01 Apr 2011 08:02
Last Modified: 02 Mar 2023 10:30
DOI: 10.2202/1538-0637.1083

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