Book ChapterDOI
15 – the market for “lemons”: quality uncertainty and the market mechanism*
George A. Akerlof
- pp 235
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TLDR
In this article, the authors present a relationship between quality and uncertainty in the automotive market and use the automobile market as a finger exercise to illustrate and develop these thoughts. But this market is chosen for its concreteness and ease in understanding rather than for its importance or realism.Abstract:
Publisher Summary
This chapter presents a relationship between quality and uncertainty. The existence of goods of many grades poses interesting and important problems for the theory of markets. There are many markets in which buyers use some market statistic to judge the quality of prospective purchases. It is perceived that in these markets, social and private returns differ, and therefore, in some cases, governmental intervention may increase the welfare of all parties. The automobile market is used as a finger exercise to illustrate and develop these thoughts. This market is chosen for its concreteness and ease in understanding rather than for its importance or realism.read more
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