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In neurobiology, lateral inhibition is the capacity of an excited neuron to reduce the activity of its neighbors. Lateral inhibition sharpens the spatial profile of excitation in response to a localized stimulus.
Sensory inhibition 
When, for instance, the skin is touched by an object, several sensory neurons in the skin next to one another are stimulated. Neurons that are firing suppress the stimulation of neighbouring neurons. In the face of inhibition, only the neurons that are most stimulated and least inhibited will fire, so the firing pattern tends to concentrate at stimulus peaks.
Lateral inhibition increases the contrast and sharpness in visual response. This phenomenon occurs in the mammalian retina, for example. In the dark, a small light stimulus will be enhanced by the different photoreceptors (rod cells). The rods in the center of the stimulus will transduce the "light" signal to the brain, whereas different rods on the outside of the stimulus will send a "dark" signal to the brain. This contrast between the light and dark creates a sharper image. (Compare unsharp masking in digital processing). This mechanism also creates the Mach band visual effect.
An often under-appreciated point is that although lateral inhibition is visualised in a spatial sense, it is also thought to exist in what are known as "lateral inhibition across abstract dimensions". This refers to lateral inhibition between neurons that are not adjacent in a spatial sense, but in terms of modality of stimulus, for example. This phenomenon is thought to aid in colour discrimination.
The concept of neural inhibition (in motor systems) was well known to Descartes and his contemporaries. Sensory inhibition in vision was inferred by Ernst Mach in 1865. Inhibition in single sensory neurons was discovered and investigated starting in 1949 by Hartline, and 1956 by Hartline, Wagner, and Ratliff.
In embryology, the concept of lateral inhibition has been adapted to describe processes in the development of cell types. It is a type of cell–cell interaction whereby a cell that adopts a particular fate inhibits its immediate neighbours from doing likewise. Lateral inhibition is well documented in flies, worms and vertebrates. In all of these organisms, the transmembrane proteins Notch and Delta (or their homologues) have been identified as mediators of the interaction.
Neuroblast with slightly more Delta protein on its cell surface will inhibit its neighboring cells from becoming neurons. In flies, frogs, and chicks, Delta is found in those cells that will become neurons, while Notch is elevated in those cells that become the glial cells.
See also 
- Georg Von Békésy (1967). Sensory Inhibition. Princeton University Press.
- Alireza Moini (2000). Vision Chips. Springer. ISBN 0-7923-8664-7.
- Christoph von der Malsburg et al. (editors) (1996). Artificial Neural Networks: ICANN 96. Springer. ISBN 3-540-61510-5.
- Alireza Moini (1997). "Vision Chips".
- Richard F. Lyon (1981), "The Optical Mouse and an Architectural Methodology for Smart Digital Sensors", Xerox PARC report VLSI-81-1
- RHS Carpenter (1997). Neurophysiology. Arnold, London.
- Marcus Jacobson (1993). Foundations of neuroscience (2nd ed.). Springer. p. 277. ISBN 978-0-306-44540-8.
- G. A. Orchard and W. A. Phillips (1991). Neural computation: a beginner's guide. Taylor & Francis. p. 26. ISBN 978-0-86377-235-1.
- Gordon L. Shaw and G. Palm (editors) (1988). Brain Theory: Reprint Volume. World Scientific. ISBN 9971-5-0484-7.
- Roy Lachman, Janet Lachman, Earl C. Butterfield (1979). Cognitive Psychology and Information Processing: An Introduction. Lawrence Erlbaum Associates. ISBN 0-89859-131-7.
- Alfred Gierer and Hans Meinhardt (1974). "Biological Pattern Formation Involving Lateral Inhibition". In Donald S. Cohen. Some Mathematical Questions in Biology VI: Mathematical Aspects of Chemical and Biochemical Problems and Quantum Chemistry (American Mathematical Society) 7. ISBN 978-0-8218-1328-7.