Manufacturer Trade Deals and Retail Price Promotions

Abstract

The author examines the phenomenon of manufacturer trade deals described as off-invoice and/or bill-backs in markets for frequently purchased consumer goods. The analysis affords a new explanation for why offering such deals may be in the best interest of manufacturers. It also provides some evidence to test the validity of the proposed theory. Though the power of the empirical tests is not strong, the results give encouragement for further data collection and more rigorous testing of the theory.