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JES
33,1 Slotting allowances and retailer
market power
Hao Wang
68 China Center for Economic Research, Peking University, Beijing,
People’s Republic of China

Abstract
Purpose – This paper attempts to understand the relationship between retailer market power and
the slotting allowances demanded by large retailers.
Design/methodology/approach – A bilateral oligopoly model is used to study slotting allowances
in retailing industries. The upstream market is a symmetric duopoly. In the downstream, a large
retailer competes with many small retailers. Only the large retailer is capable of requiring slotting fees.
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Findings – The model suggests that the large retailer uses slotting fees to capitalize its market
power. By requiring the fees from manufacturers, the large retailer raises the wholesale prices faced by
competing small retailers, and therefore, lowers their profit margins and market shares.
Research limitations/implications – More empirical evidences are desirable to support the
theory. Regarding the modeling, it might be interesting to explicitly model the bargaining between
the large retailer and manufacturers.
Practical implications – Requiring slotting allowances is an exclusionary strategy of large
retailers. Abuse of slotting allowances might have antitrust concern.
Originality/value – This paper presents probably the first analytic model that considers slotting
allowances in an asymmetric bilateral oligopoly. This approach is interesting because slotting
allowances are most likely to make difference when manufacturers are oligopolistic and retailers are
heterogeneous in sizes.
Keywords Retailing, Market forces
Paper type Research paper

1. Introduction
Slotting allowances, also called slotting fees, refer to the fees that manufacturers pay
retailers in order to have their products being carried by the retailers. The fees include
shelf-space fees, display fees, pay-to-stay fees, failure fees, etc. Slotting allowances
emerged in large chain stores in early-1980s. It first appeared in department
supermarkets, and then spread to other stores that sell electronics, computer software,
medicines, books, etc. Slotting allowance is a virtually unregulated, controversial
business practice so far. It has been the subject of congressional hearings and
investigations of the Federal Trade Commission (FTC) in the US[1]. According to a
survey conducted by Bloom et al. (2003) in 1996, which gathered the opinions of about
800 manufacturers and retailers regarding slotting allowances, both of the surveyed
manufacturers and retailers reported that retailers were more likely to require slotting
allowances or fees of all kinds in recent years. Product categories making heavy use of
slotting allowances include frozen food, dry grocery and beverages. It was estimated
Journal of Economic Studies that the allowances range from 75 to 300$ per item per store in the US (FTC, 2001).
Vol. 33 No. 1, 2006
pp. 68-77
q Emerald Group Publishing Limited
0144-3585
The author thanks Professor Ivan Png for helpful suggests and also the seminar participants at
DOI 10.1108/01443580610639901 Peking University for comments. All errors are the authors of course.
 And the total spending on slotting allowances in the US grocery industry is roughly Slotting
$16 billion per year (Desiraju, 2001). allowances
In the literature, slotting allowances are often referred as lump sum, up-front
fees that manufacturers pay retailers for stocking their products, especially new
products. Nevertheless, there are plenty of evidence to indicate that the slotting
fees, particularly the so-called pay-to-stay fees, are required for mature products as
well. Bloom (2001) documents the slotting fees in the tobacco market, and 69
Rennhoff (2004) studies the “merchandising allowances” in the ketchup industry.
The products considered in those papers are mostly mature products. On the other
hand, according to a survey by the National Food and Agriculture Policy Project
(USA), 74 percent of produce shippers indicated that the demand for various fees
and services has increased in recent years. Volume incentives, promotional
allowances, and other forms of rebates topped the list of fees demanded by
retailers. All of these allowances are tied to the volume of sales and have been a
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customary form of business for many years (NFAPP #01-04, 2001). Hence it may
not be appropriate to think slotting allowances as only lump sum fees. This paper
uses a broad definition of “slotting allowance”, which includes all kinds of fees
that manufacturers have to pay in order to have their products carried by
retailers, particularly the fees are positively related to the volume of sales.
There are mainly two schools of thoughts in debate regarding slotting allowances.
One school, represented by Kelly (1991), Chu (1992), Lariviere and Padmanabhan (1997)
and Sullivan (1997), argues that slotting allowances help to improve the distribution
efficiency of retailing industry. Slotting allowances can be used by manufacturers to
signal the quality of newly introduced products, or by retailers to screen the products
that are suitable for them to stock. Retailers can also use slotting fees to distribute their
shelf spaces more efficiently. However, according to the efficiency theories, retailers
should not require slotting fees for matured products. But this is untrue in the real
world. The efficiency theories, which definitely make sense, may not be able to explain
all the uses of slotting allowances in practice.
The other school of thought argues that requiring slotting allowances is an exercise
of market powers by large retailers. Shaffer (1991) considers slotting allowances and
resale price maintenance as facilitating devices. He shows that slotting allowances
diminish retail competition and thus lead to higher retail prices. Shaffer’ model has
perfectly competitive manufacturers in the upstream and two symmetric retailers in
the downstream. The retailers, who have considerable market powers, can pick a single
supplier from the competitive manufacturers. The suppliers have to pay slotting fees,
but accompanied with wholesale prices that are higher than their marginal costs.
Assuming the transaction contracts were public information (the “observability
assumption”), higher wholesale prices would lead to higher retail prices and
consequently higher profits for the retailers. In this sense, the slotting allowances serve
as a facilitating device for the oligopoly retailers. As Shaffer mentioned, the results
crucially depend on the observability assumption. MacAvoy (1997) claimed that
slotting allowances damage competition among manufacturers when resourceful
manufacturers bid up the fees in order to foreclosure competitors. Still another popular
argument is that slotting allowances may harm manufacturer and retailer
relationships, and therefore, damage channel efficiency. Note that the products
considered in the market power theories do not have to be new products. The powerful
 JES retailers have the incentive as well as ability to require slotting fees for both new and
33,1 mature products.
I study the effects of slotting allowances with a bilateral oligopoly model.
The upstream market consists of two symmetric manufacturers producing
substitute products. All the products must be sold through downstream retailers.
The downstream market has a powerful large retailer with considerable market share,
70 and many small retailers whose market shares are insignificant[2]. Whether a retailer
is able to require slotting fees depends on its “buyer power” in the upstream market,
which in turn depends on the retailer’s market share in the downstream. I assume that
only the large retailer has the ability of demanding slotting fees from the
manufacturers, while the small retailers cannot (I will justify this assumption later on).
The consumers have unit demand toward the products. I find that requiring slotting
fees is a method for the large retailer to capitalize its market power. The lump sum part
of the fees is wholly bore by the manufacturers. The fees that are linear to the sales are
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actually bore by the small retailers and their customers. Slotting allowances not only
transfer profits from the manufacturers to the large retailer, but also hurt the small
retailers by raising the wholesale prices that they face. Slotting fees enhance the large
retailer’s profit margin and market share. But the small retailers are left with smaller
profit margins and market shares. The large retailer is able to offer lower prices when
it is possible to require linear slotting fees. But the fees push up the prices offered by
the smaller retailers. Hence requiring slotting allowances can be an exclusionary
strategy of the large retailer. The abuse of slotting allowances might have some
antitrust concern.
The rest of this paper will proceed as follows: Section 2 gives a bilateral oligopoly
model in which slotting allowance plays a role. Section 3 studies the market outcomes
caused by slotting fees, and discusses the welfare effects on each participant of the
market. Section 4 devotes to a case study on slotting allowances. Section 5 concludes
the paper.

2. A model
Consider a bilateral oligopoly with manufacturers in upstream and retailers in
downstream. The product in consideration has two brands, manufactured by firm a
and b, respectively. We also denote the two brands as a and b. Without loss of
generality, suppose that the marginal production costs of the manufacturers are zero.
The manufacturers engage in price competition with product differentiation. The
downstream market has a large retailer (which might have multiple outlets) and many
identical small retailers. When there is no slotting fee, the market share of the large
retailer is assumed to be a [ ð0; 1Þ: Each of the other retailers takes insignificant
market share. They jointly take 1 2 a of the market. Suppose that all the retailers have
zero marginal reselling costs. The retailers also engage in price competition, but with
spatial differentiation.
The consumers are evenly distributed in the city. They have unit demand toward
the products, with high enough reservation prices. The consumers buy the good from a
retailer if and only if they do shopping at that retailer’s store and the store has the good
in stock. There is one continuum of consumers who prefer to each brand of the product.
A consumer would incur a switch cost of x if she chooses her less preferred brand.
The values of x vary for different consumers, and they are evenly distributed on
 interval [0, T ], where T is a positive number. Notice that the average switch cost of the Slotting
consumers is T/2. Hence a big T indicates high degree of product differentiation allowances
between the two brands. The preferences of the consumers are unobservable to the
retailers, which means it is impossible for the retailers to do price discrimination. We
also assume that the consumers’ preferences between the two brands are unrelated to
their geographical locations. Suppose that when there is no slotting fee, the large
retailer’s profit margins of the two brands are b per unit, while the small retailers’ 71
margins are g per unit. We often have b # g in the real world[3], though we do not
need this as an assumption.
Without loss of generality, assume that only the large retailer is able to demand
slotting fee from the manufacturers. The amount of slotting fee depends on the “buyer
power” of the large retailer. To measure the buyer power of the large retailer, it is
helpful to consult the definition provided by Secretariat of OECD:
(A) retailer is defined to have buyer power if, in relation to at least one supplier, it can credibly
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threaten to impose a long term opportunity cost (i.e. harmful or withheld benefit) which, were
the threat carried out, would be significantly disproportionate to any resulting long term
opportunity cost to itself. (Supra note 8, OECD (1998)).
In our model, delisting a manufacturer’s product cause the same percentage loss to all
retailers, which is between 0 and 50 percent. However, given all other retailers carry a
manufacturer’s product, the large retailer can potentially bring significant greater
percentage loss to the manufacturer than other retailers. Hence it is reasonable to
assume that the large retailer has greater buyer power in the upstream market. Indeed,
the survey of Bloom et al. (2003) show that both manufacturers and retailers agree that
large retailers are more likely to require slotting fees than small retailers. And larger
retailers benefit more from slotting fees than smaller retailers. The outcome of the
bargaining can be different according to different bargaining models. I assume
the bargaining results in each manufacturer paying slotting fee of S þ dq; where q is
the quantity of sale[4]. Since the game among the retailers is nothing but a typical price
competition game, the variables that we introduced above should follow the typical
relationships in price competition games. Particularly, I invoke the following stylized
assumptions:
(1) The retailers’ subgame has an unique stable pure strategy equilibrium for
reasonable configurations of slotting fees.
(2) Since the retailers offer substitute goods, the prices of the retailers are strategic
complements to each other (Bulow et al., 1985), i.e. if a retailer raises its prices,
its competitors would respond by raising their prices too, and vice versa.
(3) Other things being equal, a retailer’s prices non-negatively depend on its
marginal costs.
(4) The slotting fees non-negatively depend on the large retailer’s market share,
which means ð›S=›aÞ $ 0 and ð›d=›aÞ $ 0:

The game played in this market is: first, the two manufacturers simultaneously
announce their wholesale prices of wa and wb : Second, each of the manufacturers pays
slotting fee of S þ dq to the large retailer. Third, the retailers simultaneously buy the
products from the manufacturers and determine their retail prices. Suppose that
the retail inventories can be instantly adjusted. Hence the sale volumes of the retailers
 JES are wholly determined by their prices. Finally, the consumers enter the market and
33,1 decide where to do shopping.

3. The market outcomes

We are interested in the economic consequences of slotting fees. The fees would first
influence the manufacturers’ wholesale prices, and then the downstream retail prices.
72 The altered retail prices would then affect the retailers’ market shares and profit
margins. I will first consider the consequences of slotting fees with fixed retailer
market shares and profit margins, and then consider the situation when the market
shares and profit margins are free to change.
With slotting fees, the retail prices of the two brands would be wa 2 d þ b and
wb 2 d þ b; respectively, at the large retailer’s stores. The other stores offer prices of
wa þ g and wb þ g; respectively. Note that the retail prices of the two brands differ
by wb 2 wa in all stores. Since the switch costs of the consumers are evenly distributed
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on [0, T ], the price gap of wb 2 wa induces consumers of measure wb 2 wa =T; who

prefer brand b to a, to buy brand a product. Hence manufacturer a’s sale at the large
retailer is að1 þ ðwb 2 wa =TÞÞ; while at other stores is ð1 2 aÞð1 þ ðwb 2 wa =TÞÞ
in total. The profits function of manufacturer a is:
 wb 2 wa   wb 2 wa 
pa ¼ aðwa 2 dÞ 1 þ þ ð1 2 aÞwa 1 þ 2S ð1Þ
T T
The first order condition of manufacturer a’s profit maximization problem is:
1
wa ¼ ðT þ wb þ a · dÞ ð2Þ
2
Symmetrically, for manufacturer b we have the first order condition of:
1
wb ¼ ðT þ wa þ a · dÞ ð3Þ
2
In equilibrium, we shall have:

wa* ¼ w*b ¼ T þ a · d ð4Þ

If d ¼ 0; we have w*a ¼ w*b ¼ T; which are the equilibrium wholesale prices when
there is no slotting fee. When the large retailer requires linear slotting fees, the
manufacturers would raise their announced wholesale prices. They thus sell to the
large retailer at actual prices of T þ a · d 2 d , T; but sell to the other retailers at
price of T þ a · d . T: Hence the linear slotting fees lower the wholesale prices faced
by the large retailer, but raise those faced by the small retailers. Substituting equation
(4) into equation (1), we obtain manufacturer a’s equilibrium profit as p*a ¼ T 2 S:
This result suggests that if the market shares and profit margins were fixed, the linear
slotting fee actually do not hurt the manufacturers, because the burden can be
completely passed on to other small retailers. But the lump sum slotting fees are fully
bore by the manufacturers. The large retailer’s profit becomes ab þ 2S: The total
profit of the small retailers becomes ð1 2 aÞg; which is unaffected by the slotting fees.
Finally, the average wholesale price is:
 aðT þ ad 2 dÞ þ ð1 2 aÞðT þ adÞ ¼ T ð5Þ Slotting
And the average retail price is:
allowances

aðT þ ad 2 d þ bÞ þ ð1 2 aÞðT þ ad þ gÞ ¼ T þ ab þ ð1 2 aÞg ð6Þ

Neither of them is affected by the slotting fees. If we had b # g; the slotting fees 73
would enlarge the degree of price dispersion in the retail market. The price gap
between the two types of stores increases from g 2 b to g 2 b þ d: The consumers
who buy from the large retailer are better off with the slotting fees, but the
consumers who buy from the small retailers are worse off. We summarize the results
as a lemma.
Lemma. With fixed retailer market shares and profit margins, the lump sum
slotting fees of the large retailer transfer profits from the manufacturers to the large
retailer. The linear slotting fees lead to lower (actual) wholesale prices for the
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large retailer, but higher wholesale prices for the small retailers. However, the fees
affect neither the average wholesale prices nor the retail prices.
Nevertheless, the results conditional on fixed retailer market shares and profit
margins cannot explain why the large retailer requires linear slotting fees. Since the
linear fees lead to lower prices at the large retailer and higher prices at the small
retailers, the large retailer would gain some advantage in the price competition game.
And the advantage should be materialized into extra profit for the large retailer. And
both the retailer market shares and profit margins may change.
First, from the benchmark case, since the slotting fees lower the large retailer’s price
but raise the small retailers prices, the large retailer faces less intensive competition.
According to the assumption (ii) of Section 3, it would increase its profit margin from b.
Similarly, the small retailers would lower their profit margins from g. The price gap
between the two types of retailers finally should be , g 2 b þ d (but . g 2 bÞ:
Second, because the price gap between the two types of retailers is enlarged, more
consumers would buy from the large retailer. Therefore, the large retailer’s market
share would be greater with the slotting fees. The changes in profit margins and
market shares raise the large retailer’s profit. The reverse is true for the small retailers.
This result implies that the linear slotting fees of the large retailer have some
exclusionary effect against the small retailers.
Third, the enhanced market share of the large retailer would increase its bargaining
power in the upstream market, which allows it to extract more slotting fees from the
manufacturers. This leads to what Dobson (2005) called virtuous circle for the larger
discount retailers and the vicious circle for the convenience stores. The market would
finally converge to a new equilibrium.
Fourth, regarding the welfare, the consumers who always buy from the large
retailer’s stores are better off with the linear slotting fees, while the consumers who
always buy from the small retailers are worse off. If b # g; the total social welfare is
reduced by the linear slotting fees, because the total transportation cost of the
consumers is larger.
Finally, the consequences of the linear slotting fees discussed above would further
increase the announced wholesale prices. One can see from expressions (1)-(4) that the
downstream competition influences the upstream competition only through
parameters a and d. Since the linear slotting fees increase the large retailer’s market
 JES share and bargaining power, the manufacturers’ announced wholesale prices would
33,1 increase. Hence the exclusionary effect stated in the Lemma would be intensified when
the retail price margins and market shares are endogenous.
Proposition. Linear slotting fees lead to larger market share and profit margins for
the large retailer, but smaller market shares and profit margins for the small retailers.
The consumers who used to buy from the large retailer are better off with the slotting
74 fees. But those who always buy from the small retailers are worse off with the fees.

4. A case study
Empirical study on slotting allowances is scarce in the literature, mainly because the
data on slotting allowances are very difficult to obtain. The allowances are typically
negotiated in secrecy. And they appear in many different names and styles. In the
summer of 2003, there was a high profile conflict regarding slotting allowances
between Shanghai Seed and Nut Roasters Association (SSNRA, China) and Carrefour
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(China). The event provides valuable empirical evidences for us to test the theories
about slotting fees.
It was reported that the slotting allowances that Carrefour demanded from
the roasted seed and nut manufacturers caused considerable discontent among the
manufacturers for a long time. On 13 June, SSNRA held a three-hour talk with the
representatives of Carrefour upon the slotting allowance issue. The talk failed to reach
an agreement. SSNRA hence immediately announced that ten manufacturers of the
association would temporarily stop selling to the 34 stores of Carrefour in China from
14 June. SSNRA claimed that the slotting fees required by Carrefour were unbearable
for the manufacturers. It also argued that the fees lead to higher prices to consumers.
Carrefour nevertheless asserted that collecting slotting fees was an internationally
recognized business practice in retailing industry, and it was the way that Carrefour
normally allocated its shelf space. After several rounds of arduous bargaining, SSNRA
and Carrefour finally reached an agreement on 22 July 2003. The terms of the
agreement was not revealed to the public. On the same day, SSNRA announced that its
members would proceed to sign one-year contracts with Carrefour.
Note that the roasted seed and nut products in consideration are mostly matured
products, which means the efficiency theories based on new product screening do not
apply here. Since Carrefour carries many different brands of roasted seed and nut
products, Shaffer’s (1991) market power theory does not apply. MacAvoy’s (1997)
argument does not fit this situation either because even the biggest manufacturers are
unhappy with the slotting fees of Carrefour.
A menu of the slotting allowances of Carrefour (China) was broadly cited by Chinese
media, which includes: French holiday celebration (because Carrefour is headquartered
in France): 100,000 RMBs per year (1 RMB < 0.12 USD); Chinese holiday celebration:
300,000 RMBs per year; “Grand opening” of new store: 10,000-20,000 RMBs per store;
Store maintenance fee: 10,000-20,000 RMBs per year; In-store advertising: 2,340 RMBs
per store per advertise (there are 34 Carrefour stores in China. Each store usually do ten
advertises a year. Hence the total cost is about 790,000 RMBs per year); entrance fee for
new items: 1,000 RMBs for each new product in each store; wholesale discount:
8 percent of the sales; service fee: 1.5 to 2 percent of the sales; consulting fee: about
2 percent of the sales; shelf space management fee: 2.5 percent of the sales; fine for late
delivery: 0.3 percent per day; breakage: Carrefour does not pay for damaged products;
 returned products: about 3-5 percent; tax refunding: 5-6 percent; Fine and refunding of Slotting
price difference: suppliers have to pay Carrefour certain amount of fine if Carrefour allowances
found lower (wholesale) prices for the same products in other supermarkets. Note that
the last term is important because it implies that the manufacturers cannot cover the
slotting fees by increasing their wholesale prices to Carrefour.
There are thousands of seed and nut roasters in China, but SSNRA members are the
best known. There were 52 seed and nut roasters in SSNRA in 2003. Nearly all of them 75
are privately owned. The top six members of the association take about 75 percent of
the market in Shanghai. They also have similar market shares in the whole country.
Since there are many different varieties of roasted seed and nut products, the market is
a typical oligopoly with considerable product differentiation. On the other hand,
Carrefour is one of the biggest players in the retailing industry of China, particularly in
some big cities. It is much stronger than many other supermarket companies. Hence
the market structure of the roasted seed and nut industry fits our model pretty well.
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In the list of slotting fees required by Carrefour, many of the fees, such as wholesale
discount, service fee, consulting fee and shelf space management fee, are proportional
to the quantities of sales. The sum of these four terms is about 14 percent of the sale
revenues, which is substantial. This fact strong supports our key assumption: slotting
allowances are often positively related to the quantities of sales. There are also fees,
such as fees for holiday celebrations, grand openings, and advertising, are not directly
related to the quantities of sales. These fees may represent transfer of profits from the
manufacturers to Carrefour. Interestingly, one can see that the slotting fees for new
products are far from important compared to the other fees.
Our model suggests that the slotting allowances help Carrefour enjoy greater profit
margins and take greater market share at the costs of the manufacturers and other
small retailers. The fees make Carrefour stronger compared to its competitors. The
SSNRA members are upset mainly because of the lump sum slotting fees. The burden
of the linear slotting fees can be passed on to other retailers. This negative externality
of slotting fees is often overlooked. The consumers who used to visit Carrefour stores
should be happy with the slotting fees. Others who used to buy from convenience
stores may be indirectly affected by the fees and have to pay higher prices.

5. Concluding remarks
This paper uses a bilateral oligopoly model to study the effects of slotting allowances,
particularly linear slotting allowances. The model has a symmetric duopoly upstream
market and an asymmetric oligopoly downstream market. It suggests that powerful
retailers actually use slotting allowance as a tool to capitalize their buyer power in
upstream markets. The linear slotting allowances raise the large retailer’ profit margin
and market share at the costs of the manufacturers and the small retailers. The lump
sum parts of the slotting fees are fully borne by the manufacturers. But the burden of
linear slotting fees can be passed on to the small retailers and their customers. The
model shows no evidence that slotting allowances raise the average retail price. From
the perspective of antitrust authorities, linear slotting allowances represent an
exclusionary strategy, because large retailers can raise their rivals’ costs by
demanding slotting allowances from upstream manufacturers. Hence the abuse of
slotting allowances by large retailers might have antitrust concern. While direct
regulation over slotting allowance could be technically difficult, antitrust authorities
 JES should put some control over the expansion of large retailers and try to develop a
33,1 retailing industry where several players of similar sizes compete with each other.
Bloom et al. (2003) conjecture that there are characteristics of product markets that
make one school of thought regarding slotting fees more valid. Particularly, in highly
competitive product markets, theorems of the efficiency school may be more valid. But
in less competitive product markets, the market power theories should make more
76 sense. Our finding is somewhat consistent with this view. I would like to suggest that if
the upstream markets were less competitive, powerful retailers might try to obtain
greater share of the industry profit by requiring slotting fees. On the other hand, if the
downstream market has an asymmetric structure, large retailers may also use slotting
fees to gain some competitive advantage over their small competitors.
An important assumption of our model is that the slotting allowance on a product is
positively related to the quantity of the product sold. Though there are evidences in
support of this assumption, it would be helpful to do more direct empirical studies on
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this issue. It would also be interesting to observe empirically whether the rates of
slotting allowances were positively related to retailers’ market shares, in addition to
what the survey of Bloom et al. (2003) has revealed.

Notes
1. There is a recent FTC case regarding slotting allowances. In April 2000, the Independent
Bakers Association, the Tortilla Industry Association and the National Association of
Chewing Gum Manufacturers jointly petitioned the FTC for the issuance and enforcement of
guidelines on the use of slotting allowances in the grocery industry. The FTC conducted two
public workshops on 31 May and 1 June 2000 to discuss the issue. Finally, the Commission
decided not to issue slotting allowance guidelines at the time being, but promised to further
investigation on possible slotting allowances abuses in the retailing industry (FTC, 2001).
2. Indeed, an important development in retailing industry in the last few decades is the
polarization of store sizes. Large-scale discounters and small convenience or specialty stores
were squeezing traditional mid-sized general retailers out of the marketplace (Griffith and
Krampf, 1997).
3. According to Yahoo! Finance (2005), the gross profit margins of four competing supermarket
companies are: Kroger 24.12 percent, Albertson’s 28.03 percent, Safeway 29.36 percent and
Wal-Mart 22.99 percent. Wal-Mart, which is the largest retailers, has the lowest gross profit
margins.
4. Linear slotting fees can be viewed as a type of price discrimination. In the US, price
discrimination can be illegal under the Robinson-Patman Act (1936). But the Act can hardly
be enforced in this situation, since slotting fees are typically set through private negotiation.

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Sullivan, M.W. (1997), “Slotting allowances and the market for new products”, Journal of Law
and Economics, Vol. 40 No. 2, pp. 461-93.

Further reading
Bloom, P.N. and Cannon, J.P. (1991), “Are slotting allowances legal under the antitrust laws?”,
Journal of Public Policy and Marketing, Vol. 10 No. 1, pp. 167-86.
Deloitte and Touche (1990), Managing the Process of Introducing Deleting Products in the Grocery
and Drug Industry, Grocery Manufacturers of America, Washington, DC.
Gundlach, G.T. and Bloom, P.N. (1998), “Slotting allowances and the retail sale of alcohol
beverages”, Journal of Public and Marketing, Vol. 17 No. 2, pp. 173-84.
Marx, L.M. and Shaffer, G. (2004), “Upfront payments and exclusion”, Working paper.
O’Brien, D.P. and Shaffer, G. (1992), “Vertical control with bilateral contracts”, The RAND
Journal of Economics, Vol. 23 No. 3, pp. 299-308.

Corresponding author
Hao Wang can be contacted at [email protected]

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