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That paper is interesting because it proved that the used car market doesn't exist. A proof of a false result is not a good proof.
by fjsolwmv 8y ago
That paper is interesting because it proved that the used car market doesn't exist. A proof of a false result is not a good proof.
- smallnamespace 8y agoIt didn't 'prove' used car markets don't exist, it showed that naive car markets with high amounts of information asymmetry can't exist, and in fact they don't. All real used car markets have multiple layers of either testing and warrantying (which solves or reduces the asymmetry to a manageable level), legal remedies (many states have 'lemon laws' that push liability back to the seller), or are filled with sophisticated buyers (e.g. car auctions) who can actually tell which car is a 'lemon' because they bring a trained mechanic who will inspect the car in person.
- gonzo 8y ago> many states have 'lemon laws' that push liability back to the seller It’s not that many, and they don’t work that well. https://www.edmunds.com/auto-warranty/my-used-cars-a-lemon-am-i-stuck-with-it.html https://www.edmunds.com/auto-warranty/my-used-cars-a-lemon-a...