Do slotting allowances reduce product variety?
Teis Lunde Lømo (),
Frode Meland () and
Håvard Mork Sandvik ()
Additional contact information
Teis Lunde Lømo: University of Bergen, Department of Economics, Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Frode Meland: University of Bergen, Department of Economics, Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway, https://www.uib.no/en/persons/Frode.Meland
Håvard Mork Sandvik: Norwegian Competition Authority
No 7/20, Working Papers in Economics from University of Bergen, Department of Economics
Slotting allowances are lump-sum fees paid by manufacturers in return for retail shelf space. We present a novel mechanism by which such upfront payments facilitate vertical foreclosure and thereby reduce product variety. When bidding for the patronage of two retailers, one manufacturer may foreclose a symmetric rival by offering slotting allowances paired with per-unit input prices that offset downstream competition ex post. Contrary to the conventional wisdom, slotting allowances can exclude first-rate brands of powerful manufacturers. Our results are in line with recent empirical evidence on slotting allowances but cast doubt on the current policy approach to these payments.
Keywords: vertically related markets; slotting allowances; product variety; vertical foreclosure; exclusion; antitrust policy (search for similar items in EconPapers)
JEL-codes: L13 L14 L42 (search for similar items in EconPapers)
Pages: 37 pages
New Economics Papers: this item is included in nep-com and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://ekstern.filer.uib.no/svf/2020/WP%2007-20.pdf Full text (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hhs:bergec:2020_007
Access Statistics for this paper
More papers in Working Papers in Economics from University of Bergen, Department of Economics Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Kjell Erik Lommerud ().