Slotting Allowances and Scarce Shelf Space

29 Pages Posted: 10 Aug 2010  

Leslie M. Marx

Duke University - Fuqua School of Business, Economics Group

Greg Shaffer

University of Rochester - Simon Business School

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.

Suggested Citation

Marx, Leslie M. and Shaffer, Greg, Slotting Allowances and Scarce Shelf Space. Journal of Economics & Management Strategy, Vol. 19, No. 3, pp. 575-603, Fall 2010. Available at SSRN: https://ssrn.com/abstract=1654643 or http://dx.doi.org/10.1111/j.1530-9134.2010.00262.x

Leslie M. Marx (Contact Author)

Duke University - Fuqua School of Business, Economics Group ( email )

Box 90097
Durham, NC 27708-0097
United States

Greg Shaffer

University of Rochester - Simon Business School ( email )

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