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Do slotting allowances harm retail competition?

Foros, Øystein; Kind, Hans Jarle
Working paper
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URI
http://hdl.handle.net/11250/163066
Date
2006-09
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  • Discussion papers (SAM) [586]
Abstract
Slotting allowances are fees paid by manufacturers to get access to

retailers’ shelf space. Both in the USA and Europe, the use of slotting allowances

has attracted attention in the general press as well as among policy makers and

economists. One school of thought claims that slotting allowances are efficiency

enhancing, while another school of thought maintains that slotting allowances are

used in an anti-competitive manner. In this paper, we argue that this controversy is

partially caused by inadequate assumptions of how the retail market is structured

and organized. Using a formal model, we show that there are good reasons to

expect anti-competitive effects of slotting allowances. We further point out that

competition authorities tend to use an unsatisfactory basis for comparison when analyzing welfare consequences of slotting allowances.
Publisher
Norwegian School of Economics and Business Administration. Department of Economics
Series
Discussion paper
2006:29

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