Lemons Market
Vickie L. Bajtelsmit
Wiley Encyclopedia of Management · 2015
Abstract A “lemons market” is a market in which sellers have an informational advantage over buyers regarding the quality of the product. Buyers are not willing to pay more than an average price for an item of uncertain quality and sellers of high quality products are unwilling to sell at the prevailing price. The result is that only low quality products (“lemons”) are available for sale.
In the absence of credible signaling of quality, this will lead to market failure.