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

Greg Shaffer

Journal of Industrial Economics, 1991, vol. 39, issue 5, 557-75

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.

Date: 1991
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