60. It is very difficult for amateurs to evaluate puppies so people without additional

information tend to expect each to be an average or typical example of its breed, if

known, or a general mix of breed characteristics if a mongrel. There are four

primary markets for puppies: purebred breeders, dog pound rescue, retail pet

shops, and hobby or home breeders. Which puppy market is most likely to suffer

from Akerlofs lemons principle?4

a. Purebred dog breeders have an enormous asymmetric information

advantage over most buyers and tend to use parent dogs that exhibit prized

breed-specific characteristics and behaviors, thus increasing expected

conformity with the standard breed appearance and reducing the variation

in the distribution around the mean of visible characteristics. However,

inbreeding among good exemplars that conform with the American

Kennel Clubs (AKC) prescribed external characteristics has in many

cases lead to the propagation of difficult-to-detect internal faults such as

hip dysplasia and epilepsy.

b. Dog pound or rescue shelters selling undocumented and mongrel dogs at

relatively low prices. (Assume that the rabies and distemper shots are

provided and a pound vet has made a modest examination of the animal).

Mongrels result from the chance encounters of their parents and often

display a wide variation around the qualities of their

individual parents.

c. Retail puppy shops (e.g. of the sort you see in malls) that

place the cute little creatures in brightly lit cages for

inspection by potential buyers (or their even less-informed

children). Provenance is often difficult to determine or

validate by buyers and some experts charge that the dogs are the product

either of puppy mills5 or flawed cast-offs from purebred breeders.

d. Hobby or home breeders who are often amateur breeders trying to recover

the cost of their own female dog. They typically offer the offspring of their

(usually) purebred pet and a known (usually) registered male of the same

breed in an effort to offset the costs of acquisition and care.

e. None of these markets is susceptible to the lemons principle.