Used vehicles, lemons markets, and Used Car Rules: Some empirical evidence - Journal of Consumer Policy

The purpose of the note is to highlight what the body of economic literature has to say about the subject of lemons markets in general, and used car markets in particular. This literature makes it easier to understand why the FTC might have deleted the known defects provision from its Used Car Rule.

It is shown that the economic literature is divided on whether a lemons market actually exists in used vehicles. The authors' own research is supportive of the hypothesis that the Wisconsin statutes, with its “known defects provision,” has been ineffectual in that the mix of used vehicles transacting there is of not significantly better quality than the mix in neighboring states without such legislation.

Dieser kurze Bericht möchte herausstellen, was die ökonomische Literatur ganz allgemein zum Thema “Märkte mit mangelhaften Produkten” und zu Gebrauchtwagenmärkten im besonderen zu sagen hat. Aufgrund dieser Literatur ist es vielleicht leichter zu verstehen, warum die amerikanische Wettbewerbsbehörde keine Vorschrift über bekannte Mängel in die Bestimmungen über den Gebrauchtwagenhandel aufgenommen hat.

Es wird gezeigt, daß in der ökonomischen Literatur umstritten ist, ob man bei dem Gebrauchtwagenmarkt überhaupt von einem Markt mit schadhaften Produkten (lemons market) gesprochen werden kann. Die Autoren sehen durch ihre eigenen Ergebnisse die Vermutung gestützt, daß die Statuten des Staates Wisconsin, die eine Offenlegung bekannter Mängel fordern, insofern ineffektiv sind, als die Gebrauchtwagengeschäfte in diesem Staat durchschnittlich nicht auf einem höheren Niveau abgewickelt werden als in Nachbarstaaten ohne eine solche Bestimmung.

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Cite this article

Hoffer, G.E., Pratt, M.D. Used vehicles, lemons markets, and Used Car Rules: Some empirical evidence. J Consum Policy 10, 409–414 (1987). https://doi.org/10.1007/BF00411482

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• Issue Date: December 1987

• DOI: https://doi.org/10.1007/BF00411482

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