4 ms·

just a quibble, a lemon market is not a stage of a market, it's a market with information asymmetry which affects prices which affects market participation. th

just a quibble, a lemon market is not a stage of a market, it's a market with information asymmetry which affects prices which affects market participation. the Amazon mixing of products from separately sourced vendor inventories or luxury goods with counterfeiting competitors, or buying jewelry from a jeweler creates lemon markets for those products. used markets do have the nature of lemon markets, and once you discovered that you have been ripped off on a purchase, you have an incentive to unload what you bought, and you could call that a lifecycle stage of a product, but "descending into lemonhood" is not a progression of markets. also, the term lemon refers to the slang "lemon cars", cars with defects, and has nothing to do with a market for lemons where people seek the sour taste.

jauntywundrkind 1y ago
Amazon ending commingling is going to be interesting. Instead of having 1-gallon Tide laundry detergent we'll have 20 listings for it? Or will these folks have price authority, no one else able to sell Tide 1-gallon except Tide themselves? This feels like a potential massive shift, seems fated to raise prices significantly & flood users with way way way more results.
- mikepurvis 1y ago
  They can still say "more like this" and group the listings on the frontend, but the point would be have a clear chain of accountability between what you buy, who you buy it from, and what actually arrives. Like, when I purchased an Apple laptop charger "ships from and sold by Amazon.ca" but what arrived was an obvious counterfeit, that was... bad.
  - StableAlkyne 1y ago
    The best one I had was when I bought a VR headset, and inside of the package was a brick. No questions asked and they took my return, but man, I was sweating that I'd get accused of something.
mikepurvis 1y ago
> "descending into lemonhood" is not a progression of markets It takes time for the participants to respond to the lemon market conditions, eg buyers to make purchases that are bad, so that they come to distrust the sellers, and then sellers with quality goods taking them elsewhere because the buyers are now pricing everything as if it's going to be a lemon. The transition from healthy market to lemon market once the preconditions have been in place for enough time could reasonably be described as a "descent".
- fsckboy 1y ago
  markets can fail ("descend") for many reasons that are not lemon information asymmetry lemon markets never stop descending till all honesty is gone i see a point in maintaining the distinctions.
nostrademons 1y ago
It's not the traditional economics framework but having read Akerlof's paper, I can read the title of this post and understand what they mean. There's a very real phenomena where markets often start out functional and then descend into a market for lemons, and it has to do with game theory again. When the market is small and still growing, firms in it can count on repeat interactions. Even if your customers don't buy from you again, there are new customers, who often ask the existing customers what they should buy, and so you have an incentive to produce a good product. The information asymmetry that Akerlof describes doesn't exist, because actual experiences with the products quickly get conveyed to other market participants and incorporated into their purchase decisions. But when the market matures, those repeat interactions (and prospect of future sales) decline. People who have repeated needs and vendors they can trust often exit the market and deal directly with their vendors. What's left are buyers who are not particularly well-connected and don't have a whole lot of information on past experiences with the product, but who trust the market as a whole. This is the kind of information asymmetry that breeds a market for lemons. Eventually all products start becoming crap, everyone who knows how to find non-crap exits the marketplace, and the market collapses.
dasil003 1y ago
Sure, I get it, but I think it's a pretty powerful observation that the internet has enabled a proliferation of markets for lemons by lowering the bar so much for distribution, and raising the bar so much for baseline marketing, that it has eroded previous signals for quality across innumerable domains and jobs-to-be-done.
Ekaros 1y ago
Now I wonder did any unscrupulous company secretly perform supply chain attack against competition by inserting poorly made copies of the competitors products in Amazon's comingling... Potentially even a profitable or cost neutral venture...

jauntywundrkind 1y ago

Amazon ending commingling is going to be interesting. Instead of having 1-gallon Tide laundry detergent we'll have 20 listings for it? Or will these folks have price authority, no one else able to sell Tide 1-gallon except Tide themselves? This feels like a potential massive shift, seems fated to raise prices significantly & flood users with way way way more results.

mikepurvis 1y ago
They can still say "more like this" and group the listings on the frontend, but the point would be have a clear chain of accountability between what you buy, who you buy it from, and what actually arrives. Like, when I purchased an Apple laptop charger "ships from and sold by Amazon.ca" but what arrived was an obvious counterfeit, that was... bad.
- StableAlkyne 1y ago
  The best one I had was when I bought a VR headset, and inside of the package was a brick. No questions asked and they took my return, but man, I was sweating that I'd get accused of something.

mikepurvis 1y ago

> "descending into lemonhood" is not a progression of markets It takes time for the participants to respond to the lemon market conditions, eg buyers to make purchases that are bad, so that they come to distrust the sellers, and then sellers with quality goods taking them elsewhere because the buyers are now pricing everything as if it's going to be a lemon. The transition from healthy market to lemon market once the preconditions have been in place for enough time could reasonably be described as a "descent".

fsckboy 1y ago
markets can fail ("descend") for many reasons that are not lemon information asymmetry lemon markets never stop descending till all honesty is gone i see a point in maintaining the distinctions.

nostrademons 1y ago

It's not the traditional economics framework but having read Akerlof's paper, I can read the title of this post and understand what they mean. There's a very real phenomena where markets often start out functional and then descend into a market for lemons, and it has to do with game theory again. When the market is small and still growing, firms in it can count on repeat interactions. Even if your customers don't buy from you again, there are new customers, who often ask the existing customers what they should buy, and so you have an incentive to produce a good product. The information asymmetry that Akerlof describes doesn't exist, because actual experiences with the products quickly get conveyed to other market participants and incorporated into their purchase decisions. But when the market matures, those repeat interactions (and prospect of future sales) decline. People who have repeated needs and vendors they can trust often exit the market and deal directly with their vendors. What's left are buyers who are not particularly well-connected and don't have a whole lot of information on past experiences with the product, but who trust the market as a whole. This is the kind of information asymmetry that breeds a market for lemons. Eventually all products start becoming crap, everyone who knows how to find non-crap exits the marketplace, and the market collapses.

dasil003 1y ago

Sure, I get it, but I think it's a pretty powerful observation that the internet has enabled a proliferation of markets for lemons by lowering the bar so much for distribution, and raising the bar so much for baseline marketing, that it has eroded previous signals for quality across innumerable domains and jobs-to-be-done.

Ekaros 1y ago

Now I wonder did any unscrupulous company secretly perform supply chain attack against competition by inserting poorly made copies of the competitors products in Amazon's comingling... Potentially even a profitable or cost neutral venture...