New Product Introduction and Slotting Fees
Claire Chambolle () and
Clémence Christin ()
Working Papers from HAL
The availability of a new product in a store creates, through word-of-mouth ad- vertising, an informative spillover that may go beyond the store itself. We show that, because of this spillover, each retailer is able to extract a slotting fee from the manu- facturer at product introduction. Slotting fees may discourage innovation and in turn harm consumer surplus and welfare. We further show that the spillover may facilitate the use of pay-to-stay fees by an incumbent to deter entry. Finally, a manufacturer is likely to pay lower slotting fees when it can heavily advertize or when it faces larger buyers.
Keywords: Buyer Power; Innovation; Informative Advertising; Slotting Fees (search for similar items in EconPapers)
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