Comment by short_sells_poo
6 months ago
Well throw us bone! Can you cite robust examples where private markets deal with this gracefully? Because I can't.
An informational asymmetry that is beneficial to the businesses will heavily incentivise the businesses to maintain status quo. It's clear that they will actively fight against empowering the consumer.
The consumer has little to no power to force a change outside of regulation, since individually each consumer has asymptotically zero ability to influence the market. They want the goods, but they have no ability to make an informed decision. They can't go anywhere else. What mechanism would force this market to self correct?
Businesses with a reputation for honest dealing and good quality attract repeat business.
Why are you so pessimistic that customers can't go anywhere else?
The classic market for lemons example is about used cars. People can just not buy used cars, eg by buying only new cars. But a dealer with a reputation for honesty can still sell used cars, even if the customer will only learn whether there's a lemon later.
Another solution is to use insurance, or third party inspectors.
Listen to yourself here. Your solution is "be rich"
So what happens is you either create a cliff or you pull everything down too. Lemon markets for the poor or lemon markets for everyone. Neither is good
> Listen to yourself here. Your solution is "be rich"
I never bought a used car, or any car at all. And I did that before I was rich.
In fact, poor people generally can't afford cars in the first place.
> So what happens is you either create a cliff or you pull everything down too. Lemon markets for the poor or lemon markets for everyone. Neither is good
Huh, what? Reputation still works, even for poor customers. And so do warranties and insurances.
And you seem to imply that regulation can magically make the problem go away? It can't. Typically, regulation in this case raises the prices for everyone by demanding certain features, whether users want them or not. (But details depend on exactly what regulation you propose.)
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