Abstract
This paper develops a model of slotting allowances, taking into account the presence of two sided asymmetric information. The retailer’s private information is the probability of success of the brand in the local market; the manufacturer’s private information concerns the anticipated demand of its brand. In a brand-by-brand regime, some manufacturers are not given shelf-space because they are too likely to involve a low demand product; in the remaining cases, the retailer’s slotting fee reveals the chance of success of the brand in the local market. The uniform method is found to increase ex ante profits when there is a larger proportion of high anticipated demand manufacturers in the retailer’s market setting. The paper concludes with directions for further work.
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© 1996 Springer-Verlag Berlin Heidelberg
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Desiraju, R. (1996). Channel Coordination In The Presence of Two Sided Asymmetric Information. In: Jørgensen, S., Zaccour, G. (eds) Dynamic Competitive Analysis in Marketing. Lecture Notes in Economics and Mathematical Systems, vol 444. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-45753-1_11
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DOI: https://doi.org/10.1007/978-3-642-45753-1_11
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