Vertical market structure and slotting allowances

In order to consider the effect of slotting allowances on suppliers and consumers fully, we build a complete information dynamic game model. In the model, slotting allowances includes two parts, one part is the one-time payment and another part is changing with production. After analyzing the participants´ decision-making in three kinds of downstream market with perfectly competitive market, monopoly market, and the dominant retailer market in downstream, we find that the role of slotting allowances is different in different market structures: In dormant retail market, retail price is decreasing with slotting allowances of per unit product, the effect on wholesale price is uncertain; In monopoly market, wholesale price is increasing with slotting allowances of per unit product. After the comparing, we also can find that the slotting allowances can regulate the efficiency of industry chain.