New product introduction and slotting fees*

Claire Chambolle () and Clémence Christin ()
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Claire Chambolle: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique, ALISS - Alimentation et sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Clémence Christin: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: The availability of a new product in a store creates an informative spillover that extends past the store itself through word-of-mouth advertising. Because of this spillover, each retailer is able to extract a slotting fee from the manufacturer at product introduction. Slotting fees may discourage innovation by the manufacturer and, in turn, reduce consumer surplus and social welfare. A manufacturer is more likely to pay lower slotting fees when it can advertise more heavily, or when it faces a larger buyer. These results are robust to variations in retail competition, firms' discount factors, and the identity of the innovating firm.

Keywords: Buyer Power; Innovation; Slotting Fees; Informative Advertising (search for similar items in EconPapers)
Date: 2021-06-30
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Published in Journal of Industrial Economics, 2021, 69 (2), pp.410-442. ⟨10.1111/joie.12247⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03283867

DOI: 10.1111/joie.12247

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