The Market For Lemons
"The Market for Lemons: Quality Uncertainty and the Market Mechanism" is a 1970 paper by the economist George Akerlof. It discusses information asymmetry, which occurs when the seller knows more about a product than the buyer. A lemon is an American slang term for a car that is found to be defective only after it has been bought. Akerlof, Michael Spence, and Joseph Stiglitz jointly received the Nobel Memorial Prize in Economic Sciences in 2001 for their research related to asymmetric information. Akerlof's paper uses the market for used cars as an example of the problem of quality uncertainty. It concludes that owners of good cars will not place their cars on the used car market. This is sometimes summarized as "the bad driving out the good" in the market.
Read more about The Market For Lemons: Thesis, Statistical Abstract of The Problem, Asymmetric Information, Critical Reception, Criteria, Impact On Markets, Laws in The United States, Criticism
Famous quotes containing the word market:
“To throw obstacles in the way of a complete education is like putting out the eyes; to deny the rights of property is like cutting off the hands. To refuse political equality is like robbing the ostracized of all self-respect, of credit in the market place, of recompense in the world of work, of a voice in choosing those who make and administer the law, a choice in the jury before whom they are tried, and in the judge who decides their punishment.”
—Elizabeth Cady Stanton (1815–1902)