Lemon Market

A lemon market refers to a market where buyers cannot accurately assess the quality of a product before purchase, leading to an imbalance between buyers and sellers. The term originated from the used car market, where "lemons" are poorly functioning cars. Because buyers cannot differentiate between good and bad cars, they are only willing to pay an average price, which discourages sellers of high-quality cars from participating. This can result in a market filled with low-quality products, as the good ones are driven out, ultimately harming both buyers and sellers.