Agricultural Economics Department


Date of this Version



Published in Agribusiness 17:3 (2001), pp. 417–422. Copyright © 2001 John Wiley & Sons, Inc. Used by permission.


It has become common practice for retail grocers to charge grocery manufacturers a slotting allowance for placing products on the retail shelf. Manufacturers view the allowance as anti-competitive. Retailers view it as compensation for the risks associated with stocking new products. The largely theoretical literature on the subject is consistent with both views. This article proposes an empirical model to test the effect of slotting allowances on performance, and discusses if and how the model can be tied to the qualitative predictions of existing theoretical literature.