On the market for “Lemons”: quality provision in markets with asymmetric information

Konstantinos Giannakas () and Murray Fulton
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Murray Fulton: University of Saskatchewan

Humanities and Social Sciences Communications, 2020, vol. 7, issue 1, 1-6

Abstract: Abstract Akerlof’s “Lemons” paper provides a seminal economic result suggesting that, in markets with asymmetric information where product quality is unobservable by consumers prior to purchase and use, the introduction of a low-quality product will drive its higher quality counterpart(s) out of the market. In this paper we identify some empirically relevant cases/conditions under which the introduction of a low-quality product does not drive its higher quality substitutes out of the market but, instead, ends-up coexisting with them.

Date: 2020
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DOI: 10.1057/s41599-020-00658-w

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