The Markup for Lemons: Quality and Uncertainty in American and British Used-Car Markets, c. 1953-1973

Avner Offer ()

No _060, Oxford University Economic and Social History Series from Economics Group, Nuffield College, University of Oxford

Abstract: Automobile depreciation rates and dealer markups in the United States and Britain during the 1950s and 1960s provide evidence on the effect of asymmetric information on market structures. Initial depreciation was not exceptional, and trade was not disabled. ‘Lemon’ effects were evident in some periods but not others. Depreciation and markups increased with mechanical and styling uncertainty. Adverse selection kicked in as cars aged: high selling costs caused dealers to withdraw from trading older cars. Despite their lower quality, British makes depreciated less, probably due to different novelty signals and longer styling cycles.

New Economics Papers: this item is included in nep-his and nep-tid
Date: 2005-09-01
View list of references

Downloads: (external link)
http://www.nuff.ox.ac.uk/Economics/History/paper60/60offer.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:nuf:esohwp:_060

Access Statistics for this paper

More papers in Oxford University Economic and Social History Series from Economics Group, Nuffield College, University of Oxford
Contact information at EDIRC.
Series data maintained by Maxine Collett ().