Earlier quoted context omitted.
Sidenote: car sales in general are not ethical. When you go to the dealer & talk to a salesperson, and subsequently talk to the $ guy, you will be required to sign a piece of paper stating that you cannot derive ANY claims on what the salesperson told you, except those written down on that form. And that form is empty. Also, I wish there was a nationwide requirement for warranty. Not that I have a problem with sellin…
Most US states have the concept of "Lemon Laws" that provide consumer protection when buy used cars. Ref: https://en.wikipedia.org/wiki/Lemon_law That said, this economic paper is pretty legendary at this point: > Summary: > Ref: https://en.wikipedia.org/wiki/The_Market_for_Lemons
The theory that the removal of lemon laws would result in a more informed consumer base has no basis in reality--economists need to spend less time theorizing about how economies work and start looking at actual economies to figure out how they work. We had decades of consumers not becoming informed enough to differentiate between a peach and a lemon before lemon laws existed. That's decades of proof that The Market for Lemons is wrong. That should have been caught in peer review, and that should have prevented the paper from being published. The fact that this absurd paper won a Nobel Prize should call into question the validity of the prevailing ideas of the entire field of economics, at least at that time.
The market for cars of uncertain quality will always have a floor on the price because people don't have a choice except to take a risk on buying a car of uncertain quality in an economy where the car industry has successfully dismantled public transportation infrastructure. Given this inelastic demand, dealers can leverage consumer ignorance to sell lemons as if they were peaches, and the consumer suffers. Hoping consumers will educate themselves is a solution that doesn't scale; it is unrealistic to expect consumers to become experts on cars, computers, phones, medical devices, and every other complex product just so they can avoid being sold inferior, broken products. It is clear that the only solution that works is for experts on products, i.e. the sellers, be held accountable when they knowingly sell low quality products as if they were high quality.
[1] https://slatestarcodex.com/2014/07/30/meditations-on-moloch/