The market for used cars : new evidence of the lemons phenomenon

Emons, Winand and Sheldon, George. (2009) The market for used cars : new evidence of the lemons phenomenon. Applied economics, 41. pp. 2867-2885.

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The lemons model assumes that owners of used cars have an information advantage over potential buyers with respect to the quality of their vehicles. Owners of bad cars try to sell them to ill-informed buyers while owners of good cars hold on to theirs. Consequently, the quality of traded automobiles tends to be sub-average. In contrast to previous empirical work, the following paper investigates both the behavior of buyers and sellers, testing for adverse selection by sellers and for quality uncertainty among buyers with a sample consisting of all 1985 cars registered in the Swiss canton of Basle-City over the period 1985-1991. Our data support both adverse selection and buyer uncertainty suggesting that a lemons problem exists.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Arbeitsmarkt- und Industrieökonomie (Sheldon)
UniBasel Contributors:Sheldon, George
Item Type:Article, refereed
Article Subtype:Research Article
Note:Publication type according to Uni Basel Research Database: Journal article
edoc DOI:
Last Modified:11 Oct 2017 06:18
Deposited On:22 Mar 2012 14:13

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