You’re mistaken about lemon markets: the initial fraction of lemons does matter. The number of lemon cars is fixed, and it imposes a sort of tax on transactions, but if that tax is low enough, it’s still worth selling good cars. There’s a threshold effect, a point at which most of the good items are suddenly driven out.
You’re mistaken about lemon markets: the initial fraction of lemons does matter. The number of lemon cars is fixed, and it imposes a sort of tax on transactions, but if that tax is low enough, it’s still worth selling good cars. There’s a threshold effect, a point at which most of the good items are suddenly driven out.