George Akerlofs model of the used car market results in a market where only lemons are sold

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George Akerlof’s model of the used car market results in a market where only lemons are sold and there is no market for high-quality used cars. But, in fact, we observe that, in fact, the used car market is a robust market where millions of used cars of varying quality are sold. Does that mean Akerlof’s model is wrong? Why or why not?
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Modern Principles of Economics

ISBN: 978-1429278393

3rd edition

Authors: Tyler Cowen, Alex Tabarrok

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