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Naked Slotting Fees For Vertical Control Of Multi-Product Retail Markets, Robert Innes, Stephen F. Hamilton

Economics

Slotting fees are fixed charges paid by food manufacturers to retailers for access to the retail market. This note considers this practice in the context of multi-product markets with imperfectly competitive retailers, a monopoly supplier of one good, and competitive suppliers of other goods. We show how the monopolist and the retailers can use "naked" slotting fees–charges imposed on the suppliers of other goods–to obtain vertically integrated monopoly profits.