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I may be misunderstanding, but I would expect the "market for lemon" to be only valid for a physical market, no ? The principle being that high quality cars are

I may be misunderstanding, but I would expect the "market for lemon" to be only valid for a physical market, no ? The principle being that high quality cars are sold faster and get out of the market, so the average quality decrease. But for antivirus, selling the antivirus does not get it out of the market (the inverse is pretty much true since it makes it more famous), hence the average quality does not decrease.

sitharus 9y ago
In this case it's the customer that is removed from the market. Nobody (deliberately) buys two antivirus products. The effect is the same, nobody's going to develop and market a 'peach' antivirus product since the users don't understand it and are very price sensitive.
tempay 9y ago
The problem is the average user doesn't know what makes a quality antivirus product and they also don't want to pay a high price for one. As a result antivirus manufacturers are incentivised to produce a cheap product which only needs to tick all the same boxes of their competitors in product comparison tables, even if features don't actually improve security. Producing a high quality product is far more expensive and may result in fewer customers due to the previous point.
ploxiln 9y ago
You misunderstand the physical car market metaphor - the high quality cars are not sold faster. They are taken off the market and not sold at all, because the market price is too low. The market price is too low because the buyers can't tell good from bad, so they just guess they will get average quality, and just pay what the average is worth. They don't pay for the high-quality used cars - even if they did, it would usually be for the wrong cars.
throwaway41597 9y ago
You mean "why can't peach sellers make it up with volume?", marginal cost of copying software is zero, right? The problem is : so can lemon sellers. The price already accounts for this and it is too low to fund a peach seller (research, software engineering, customer service...).
thecrazyone 9y ago
I think the "market for lemons" analogy is needlessly complicating this because that's an incorrect analogy IMHO. If it was the case that peaches can't be produced at prices a customer is willing to pay, then the market splits to high-end and low-end with two types of customers with different paying ability like in high end cars (think mercs and rolls royces). A customer might have information asymmetry but isn't stupid (is this overtly harsh?). To quote my own comment in a parallel thread here: "wouldn't a middle man who tests cars try and separate the lot and charge for his services?". The market for lemons seems model a static market which is not realistic IMHO

sitharus 9y ago

In this case it's the customer that is removed from the market. Nobody (deliberately) buys two antivirus products. The effect is the same, nobody's going to develop and market a 'peach' antivirus product since the users don't understand it and are very price sensitive.

tempay 9y ago

The problem is the average user doesn't know what makes a quality antivirus product and they also don't want to pay a high price for one. As a result antivirus manufacturers are incentivised to produce a cheap product which only needs to tick all the same boxes of their competitors in product comparison tables, even if features don't actually improve security. Producing a high quality product is far more expensive and may result in fewer customers due to the previous point.

ploxiln 9y ago

You misunderstand the physical car market metaphor - the high quality cars are not sold faster. They are taken off the market and not sold at all, because the market price is too low. The market price is too low because the buyers can't tell good from bad, so they just guess they will get average quality, and just pay what the average is worth. They don't pay for the high-quality used cars - even if they did, it would usually be for the wrong cars.

throwaway41597 9y ago

You mean "why can't peach sellers make it up with volume?", marginal cost of copying software is zero, right? The problem is : so can lemon sellers. The price already accounts for this and it is too low to fund a peach seller (research, software engineering, customer service...).

thecrazyone 9y ago

I think the "market for lemons" analogy is needlessly complicating this because that's an incorrect analogy IMHO. If it was the case that peaches can't be produced at prices a customer is willing to pay, then the market splits to high-end and low-end with two types of customers with different paying ability like in high end cars (think mercs and rolls royces). A customer might have information asymmetry but isn't stupid (is this overtly harsh?). To quote my own comment in a parallel thread here: "wouldn't a middle man who tests cars try and separate the lot and charge for his services?". The market for lemons seems model a static market which is not realistic IMHO