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An Attempt at a literature review of “The Market for Lemons” Theory and a Case Study in Algerian Local E-commerce

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  • Salmi, Mabrouka

Abstract

This paper attempts to understand the theory of “the market for lemons” proposed by the American economist Akerlof in 1970, review some related works, and apply this theory in an Algerian context. The theory of Akerlof is key to the information economy. One of the first pieces of research that defined adverse selection is when the two parties in a transaction have different levels of information. We present our example, not well established in the literature, of asymmetrical information in the local e-commerce market, which explains the e-sellers problem with e-customers behaviors. We describe the impact of such issues, such as the loss of e-sellers caused by behaviors of e-customers, and propose solutions based on the literature. Finally, we are beyond reviewing such landmark research or adding anything to it, related works are not fully discovered, and we present a humble piece of research that may exhibit any flaws.

Suggested Citation

  • Salmi, Mabrouka, 2022. "An Attempt at a literature review of “The Market for Lemons” Theory and a Case Study in Algerian Local E-commerce," MPRA Paper 112390, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:112390
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    References listed on IDEAS

    as
    1. Leland, Hayne E, 1979. "Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1328-1346, December.
    2. Kessler, Anke S, 2001. "Revisiting the Lemons Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(1), pages 25-41, February.
    3. Charles Wilson, 1980. "The Nature of Equilibrium in Markets with Adverse Selection," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 108-130, Spring.
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    More about this item

    Keywords

    Information Asymmetry; Adverse Selection; Lemons Market; Local E-commerce.;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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