New Product Introduction and Slotting Fees

Abstract : The availability of a new product in a store creates, through word-of-mouth ad- vertising, an informative spillover that may go beyond the store itself. We show that, because of this spillover, each retailer is able to extract a slotting fee from the manu- facturer at product introduction. Slotting fees may discourage innovation and in turn harm consumer surplus and welfare. We further show that the spillover may facilitate the use of pay-to-stay fees by an incumbent to deter entry. Finally, a manufacturer is likely to pay lower slotting fees when it can heavily advertize or when it faces larger buyers.
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Submitted on : Tuesday, February 7, 2017 - 10:20:23 AM
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Claire Chambolle, Clémence Christin. New Product Introduction and Slotting Fees . 2017. ⟨hal-01458949⟩

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