Slotting Allowances and Scarce Shelf Space |
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| Authors: | Leslie M. Marx Greg Shaffer |
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| Affiliation: | 1. Fuqua School of Business Duke University Durham, NC 27708 marx@duke.edu;2. Simon School of Business University of Rochester Rochester, NY 14627 shaffer@simon.rochester.edu |
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| Abstract: | Slotting allowances are payments made by manufacturers to obtain retail shelf space. They are widespread in the grocery industry and a concern to antitrust authorities. A popular view is that slotting allowances arise because there are more products than retailers can profitably carry given their shelf space. We show that the causality can also go the other way: the scarcity of shelf space may in part be due to the feasibility of slotting allowances. It follows that slotting allowances can be anticompetitive even if they have no effect on retail prices. |
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