Manufacturers often pay “slotting fees,” payments to retailers to provide their product
prime shelf space. These fees range from $25,000 for one item in one store to $3 million
for a chain of stores. An example is placing Doritos within a football display before
Super Bowl Sunday.
a. In what type of market structure would this behavior likely be prevalent?
b. What does this behavior accomplish for the firm?
c. Demonstrate the likely long-term profit in this market structure.
d. Firms have complained to the Federal Trade Commission that this practice is
unfair. What is their likely argument?
e. What is an argument on the other side of that presented in d?