Question: Chapter 8 explained that thousands of new grocery products are developed every year. Often the grocer will give the developer of a new product the chance to sell it through the grocer's stores, but only if the developer agrees to purchase the grocer's inventory of items its product is replacing, or to engage in a coordinated advertising campaign with the grocer.
a. Use the economics of asymmetric information to explain why practices like these might exist.
b. Is the grocer more likely to make this request if the new product comes from Campbell Soup or General Mills, rather than an independent inventor?