Akerlof's essay'The Market for Lemons' - Book Report/Review Example

Only on StudentShare

Extract of sample
Akerlof's essay'The Market for Lemons'

Everyone can observe that this is a most important contribution to economics.
Undoubtedly, Akerlof is asserting that his paper has something to say regarding an amazingly wide range of fact in the real world. In the case of the labor market, he appears to be promising to elucidate a number of features of the real world. However in the case of business in underdeveloped countries, he is merely intended for giving structure to a statement that is often made regarding the real world. At this point, the insinuation appears to be that Akerlof's model will one way or another reformulate an empirical proposition which is usually believed to be true.
Akerlof then says that, although his theory has these very general applications, he will focus on the market for used cars: "The automobile market is used as a finger exercise to illustrate and develop these thoughts. It should be emphasized that this market is chosen for its concreteness and ease in understanding rather than for its importance or realism" (Akerlof, George, 1970)
On first reading, it is tempting to interpret "the automobile market" as the market in which real people buy and sell real cars, and to think that Akerlof is going to present some kind of case-study. One can see why he might focus on one particular market which is easy to understand, even if that market is not very important on the scale of the economy as a whole. ...
Download paper

Summary

Akerlof's 1970 paper "The market for lemons" is one of the well-known papers in academic economics. It is in general seen as having initiated to economics the concept of asymmetric information, and in doing so; flashing off what is now an entire branch of economics: the economics of information…
Author : amyschaden

Related Essays

Market
As G will increase, this will be impacted in the short run by a decrease in consumption, since many people will be there to give loans. This will effectively increase interest rates. Along with this there will be an impact on aggregate output as output will increase with the increase in government spending....
11 pages (2761 words) Essay
Market Efficiency
However, market efficiency hypothesis (EMH), according to Fama in 1970 - suggests that, at any given time, prices fully reflect all available information on a particular stock and/or market. Thus, according to the EMH, no investor has an advantage in predicting a return on a stock price .The paper will start by defining market efficiency and it various aspects....
8 pages (2008 words) Essay
Market Structures
This can be further elaborated as under,...
8 pages (2008 words) Essay
Initial Market
The latter poses the most difficult challenge as it requires creativity and a real close look at what consumers want. One issue that can be addressed is the combination packaging of products for the 1 million male cigar and cigarette customers who use both products. We can obtain some information from this segment in terms of cigar to cigarette use ratios, to provide the most desirable product combination. Branding efforts of cigarette products should continue to focus on the retailers who will likely sell higher volumes of product. Data from each retailer and customers who purchased our...
3 pages (753 words) Essay
Oil Market
Deflation pressure, not inflation, is currently one of the greatest concern for the global economy. During the previous year, producer prices have reduced all over the developed world; consumer prices have been decreasing for the last 6 months in Germany and France; in Japan wages have actually dropped 4% for the past year. Up until the latest crisis prices were decreasing in Brazil; they continue to fall in China and Hong Kong; most probably they will soon be declining in various other developing countries (Case & Fair, 2005)....
4 pages (1004 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!