Shelf Space Fees and Inter-Brand Competition

25 Pages Posted: 24 Dec 2008  

Hao Wang

Peking University - China Center for Economic Research (CCER)

Date Written: December, 22 2008

Abstract

When in-store display influences consumer choices, shelf space allocation can be strategically used by retailers to extract payments from manufacturers. The paper finds that manufacturers with better brand names have higher willingness-to-pay for shelf spaces. Shelf space fees soften inter-brand competition and result in higher sale-weighted average retail price. The fees increase the total industry profit but lower the upstream profit. Both the aggregate consumer surplus and social welfare are negatively affected. This paper suggests that even when the shelf space fees do not drive small manufacturers out of marketplaces, they might still be anticompetitive.

Keywords: Antitrust, In-store display, Shelf space fee, Slotting allowance

JEL Classification: L1, L4, M2, M3

Suggested Citation

Wang, Hao, Shelf Space Fees and Inter-Brand Competition (December, 22 2008). Available at SSRN: https://ssrn.com/abstract=1319642 or http://dx.doi.org/10.2139/ssrn.1319642

Hao Wang (Contact Author)

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, Beijing 100871
China

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