Akerlof's market for lemons

Akerlof's market for lemons describes how quality declines in markets where buyers cannot easily verify the true condition of a product—like used cars. Because sellers know more about the car’s condition than buyers, they might sell poor-quality cars (“lemons”) at prices that reflect average quality. This discourages owners of good-quality cars from selling, as they can't get fair value, leading to a market flooded with low-quality goods. Ultimately, this information asymmetry reduces overall market quality and efficiency, illustrating how lack of transparency can undermine markets.