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Wholesale Spreads and the Dynamics of Retail Price Volatility

Prof. Raghbendra Jha and Hari K Nagarajan
1998
Working Paper No
123
Body

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

Key words
Retail Price
WP.IIMB_.123.pdf (1.05 MB)

Wholesale Spreads and the Dynamics of Retail Price Volatility

Author(s) Name: Prof. Raghbendra Jha and Hari K Nagarajan, 1998
Working Paper No : 123
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

Keywords: Retail Price
WP.IIMB_.123.pdf (1.05 MB)