The Market for Lemons is legendary only as an example of economists ignoring reality to pursue their pet theories. Reality is closer to that explained in Mediations on Moloch.
The theory that the removal of lemon laws would result in a more informed consumer base has no basis in reality--economists need to spend less time theorizing about how economies work and start looking at actual economies to figure out how they work. We had decades of consumers not becoming informed enough to differentiate between a peach and a lemon before lemon laws existed. That's decades of proof that The Market for Lemons is wrong. That should have been caught in peer review, and that should have prevented the paper from being published. The fact that this absurd paper won a Nobel Prize should call into question the validity of the prevailing ideas of the entire field of economics, at least at that time.
The market for cars of uncertain quality will always have a floor on the price because people don't have a choice except to take a risk on buying a car of uncertain quality in an economy where the car industry has successfully dismantled public transportation infrastructure. Given this inelastic demand, dealers can leverage consumer ignorance to sell lemons as if they were peaches, and the consumer suffers. Hoping consumers will educate themselves is a solution that doesn't scale; it is unrealistic to expect consumers to become experts on cars, computers, phones, medical devices, and every other complex product just so they can avoid being sold inferior, broken products. It is clear that the only solution that works is for experts on products, i.e. the sellers, be held accountable when they knowingly sell low quality products as if they were high quality.
> The theory that the removal of lemon laws would result in a more informed consumer base has no basis in reality.
That's not what the paper says. It proposes government intervention and predates many lemon laws.
> Hoping consumers will educate themselves is a solution that doesn't scale; it is unrealistic to expect consumers to become experts on cars, computers, phones, medical devices, and every other complex product just so they can avoid being sold inferior, broken products.
This is the core claim of the original paper. When buyers have information asymmetry relative to sellers, they suffer.
> It is clear that the only solution that works is for experts on products, i.e. the sellers, be held accountable when they knowingly sell low quality products as if they were high quality.
This is literally what a lemon law is and what you're saying is on page 1 of the Market for Lemons paper.
> There are many markets in which buyers use some market
statistic to judge the quality of prospective purchases. In this case
there is incentive for sellers to market poor quality merchandise,
since the returns for good quality accrue mainly to the entire group
whose statistic is affected rather than to the individual seller. As
a result there tends to be a reduction in the average quality of goods
and also in the size of the market. It should also be perceived that
in these markets social and private returns differ, and therefore, in
some cases, governmental intervention may increase the welfare of
all parties
The theory that the removal of lemon laws would result in a more informed consumer base has no basis in reality--economists need to spend less time theorizing about how economies work and start looking at actual economies to figure out how they work. We had decades of consumers not becoming informed enough to differentiate between a peach and a lemon before lemon laws existed. That's decades of proof that The Market for Lemons is wrong. That should have been caught in peer review, and that should have prevented the paper from being published. The fact that this absurd paper won a Nobel Prize should call into question the validity of the prevailing ideas of the entire field of economics, at least at that time.
The market for cars of uncertain quality will always have a floor on the price because people don't have a choice except to take a risk on buying a car of uncertain quality in an economy where the car industry has successfully dismantled public transportation infrastructure. Given this inelastic demand, dealers can leverage consumer ignorance to sell lemons as if they were peaches, and the consumer suffers. Hoping consumers will educate themselves is a solution that doesn't scale; it is unrealistic to expect consumers to become experts on cars, computers, phones, medical devices, and every other complex product just so they can avoid being sold inferior, broken products. It is clear that the only solution that works is for experts on products, i.e. the sellers, be held accountable when they knowingly sell low quality products as if they were high quality.
[1] https://slatestarcodex.com/2014/07/30/meditations-on-moloch/