Final answer:
Horizontal cells in the vertebrate retina are responsible for lateral inhibition, enhancing visual contrast and sharpness by inhibiting distant photoreceptors and bipolar cells.
Step-by-step explanation:
In the vertebrate retina, the cells responsible for lateral inhibition are the horizontal cells. These horizontal cells interact with the photoreceptors (rods and cones) and the bipolar cells to enhance visual contrast and sharpness. When a rod or cone activates a horizontal cell, the horizontal cell inhibits more distant photoreceptors and bipolar cells through lateral inhibition, making regions receiving light appear lighter and surrounding dark areas appear darker. This process helps in sharpening the edges and enhancing the contrast in our visual perception.