Competing for shelf space

Victor Martinez de Albeniz () and Guillaume Roels
Additional contact information
Victor Martinez de Albeniz: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Guillaume Roels: UCLA Anderson School of Management

No D/717, IESE Research Papers from IESE Business School

Abstract: This paper studies competition for shelf space in a multi-supplier retail point. We consider a retailer that seeks to allocate her shelf space to maximize her profit. Because products associated with larger profit margin are granted more shelf space, suppliers can offer the retailer financial incentives to obtain larger space allocations. We analyze the competitive dynamics arising from the scarcity of space, and show existence and uniqueness of equilibrium. We then demonstrate that the inefficiencies from decentralizing decision-making are limited to 6% with wholesale-price contracts, and that full coordination can be achieved with pay-to-stay fee contracts. We finally investigate how competition is distorted under the practice of category management.

Keywords: Game theory; Supply chain competition; Price of Anarchy; Pricing; Supply contracts (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007-11-15
New Economics Papers: this item is included in nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ebg:iesewp:d-0717

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