Price Transmission in Vertical Markets : A Comment and an Extension

This paper examines the impact of dynamic information acquisition by retailers, on the degree of asymmetric price transmission in vertical markets. We propose a generalization of the extant models of asymmetric price transmission, by endogenising the process of dynamic information acquisition. It is found that, this has a significant impact on the degree of asymmetry in the process of price transmission. A test of the functional form by using the restricted version of the model rejects the restricted model