Vortrag
Consumers' Shopping Costs as a Cause of Slotting Fees: A Rent-Shifting Mechanism

Stéphane Caprice, Vanessa von Schlippenbach


25th Annual Congress of the European Economic Association : EEA 2010
Glasgow, Großbritannien, 23.08.2010 - 26.08.2010



Abstract:
This paper explains the emergence of slotting fees in a sequential bargaining framework with one retailer and to suppliers of substitutable goods. We take consumers' shopping costs explicitly into account. To economize on their shopping time, consumers tend to bundle their purchases inducing positive demand externalities. If the complementarity effect dominates the original substitution effect, the wholesale price negotiated with the first supplier is upward distorted in order to shift rent from the second supplier. As long as the first supplier has only little bargaining power, she compensates the retailer for the upward distorted wholesale price by paying a slotting fee.

Abstract

This paper explains the emergence of slotting fees in a sequential bargaining framework with one retailer and to suppliers of substitutable goods. We take consumers' shopping costs explicitly into account. To economize on their shopping time, consumers tend to bundle their purchases inducing positive demand externalities. If the complementarity effect dominates the original substitution effect, the wholesale price negotiated with the first supplier is upward distorted in order to shift rent from the second supplier. As long as the first supplier has only little bargaining power, she compensates the retailer for the upward distorted wholesale price by paying a slotting fee.

Themen: Wettbewerb und Regulierung



JEL-Classification: L22;L42
Keywords: Shopping Costs, Rent-Shifting, Slotting Fees
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