Document Type

Working Paper

Abstract

This paper proposes a general model of asymmetric price transmission at the retail level to examine the volatility of retail spreads in vertical markets, with endogenous overshooting of the wholesale spreads. The model is tested with Indian data and detects significant levels of asymmetry in price transmission. In addition it is found that endogenising the instability at the wholesale level is significant in explaining volatilities of retail spreads. JEL Classification: C32, D43, Q13. Q18

Publication Date

1-4-1998

Publisher

Indian Institute of Management Bangalore

Relation

IIMB Working Paper-123

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