Slotting allowance is a kind of additional charge that manufacturers pay to retailers in order to obtain shelf space. As the retailers¡¦ market power becomes greater, the slotting allowance has become more and more common in the retail grocery industry in recent years. This thesis constructs a channel which consists of two competing manufacturers and a common dealing retailer. The retailer is modeled as the leader, and the manufacturers are modeled as the followers. We use a two-stage game theory to analyze the economics effects of slotting allowance and charging slotting allowance with price discount promotion on channel competition. Under certain assumptions we find out that the valorem slotting allowance is beneficial to market price efficiency and consumers¡¦welfare. And charging slotting allowance with price discount promotion has had no impact.