柠檬的市场质量的不确定性和市场机制外文翻译.docx

1、柠檬的市场质量的不确定性和市场机制外文翻译外文翻译原文The market for lemons: quality uncertainty and the market mechanismMaterial Source: The Quarterly Journal of Economics, 1970 Author:GEORGE A. AKERLOF I. INTRODUCTION This paper relates quality and uncertainty. The existence of goods of many grades poses interesting and imp

2、ortant problems for the theory of markets. On the one hand, the interaction of quality differences and uncertainty may explain important institutions of the labor market. On the other hand, this paper presents a struggling attempt to give structure to the statement: Business in underdeveloped countr

3、ies is difficult; in particular, a structure is given for determining the economic costs of dishonesty. Additional applications of the theory include comments on the structure of money markets, on the notion of insurability, on the liquidity of durables, and on brand-name goods. There are many marke

4、ts in which buyers use some market statistic to judge the quality of prospective purchases. In this case there is incentive for sellers to market poor quality merchandise, since the returns for good quality accrue mainly to the entire group whose statistic is affected rather than to the individual s

5、eller. As a result there tends to be a reduction in the average quality of goods and also in the size of the market. It should also be perceived that in these markets social and private returns differ, and therefore, in some cases, governmental intervention may increase the welfare of all parties. O

6、r private institutions may arise to take advantage of the potential increases in welfare which can accrue to all parties. By nature, however, these institutions are non atomistic, and therefore concentrations of power with ill consequences of their own can develop. The automobile market is used as a

7、 finger exercise to illustrate and develop these thoughts. It should be emphasized that this market is chosen for its concreteness and ease in understanding rather than for its importance or realism. II. THE MODEL WITH AUTOMOBILES AS AN EXAMPLE A.The Automobiles Market The example of used cars captu

8、res the essence of the problem. From time to time one hears either mention of or surprise at the large price difference between new cars and those which have just left the showroom. The usual lunch table justification for this phenomenon the pure joy of owning a new car. We offer a different explana

9、tion. Suppose (for the sake of clarity rather than reality) that there are just four kinds of cars. There are new cars and used cars. There are good cars and bad cars (which in America are known as lemons). A new car may be a good car or a lemon, and of course the same is true of used cars.The indiv

10、iduals in this market buy a new automobile without knowing whether the car they buy will be good or a lemon. But they do know that with probability q it is a good car and with probability (1-q) it is a lemon; by assumption, q is the proportion of good cars produced and (1-q) is the proportion of lem

11、ons.After owning a specific car, however, for a length of time, the car owner can form a good idea of the quality of this machine; i.e., the owner assigns a new probability to the event that his car is a lemon. This estimate is more accurate than the original estimate. An asymmetry in available info

12、rmation has developed: for the sellers now have more knowledge about the quality of a car than the buyers. But good cars and bad cars must still sell at the same price since it is impossible for a buyer to tell the difference between a good car and a bad car. It is apparent that a used car cannot ha

13、ve the same valuation as a new car .if it did have the same valuation, it would clearly be advantageous to trade a lemon at the price of new car, and buy another new car, at a higher probability q of being good and a lower probability of being bad. Thus the owner of a good machine must be locked in.

14、 Not only is it true that he cannot receive the true value of his car, but he cannot even obtain the expected value of a new car. Greshams law has made a modified reappearance. For most cars traded will be the lemons, and good cars may not be traded at all. The bad cars tend to drive out the good (i

15、n much the same way that bad money drives out the good). But the analogy with Greshams law is not quite complete: bad cars drive out the good because they sell at the same price as good cars; similarly, bad money drives out good because the exchange rate is even. But the bad cars sell at the same pr

16、ice as good cars since it is impossible for a buyer to tell the difference between a good and a bad car; only the seller knows. In Greshams law, however, presumably both buyer and seller can tell the difference between good and bad money. So the analogy is instructive, but not complete .B. Asymmetri

17、cal Information It has been seen that the good cars may be driven out of the market by the lemons. But in a more continuous case with different grades of goods, even worse pathologies can exist. For it is quite possible to have the bad driving out the not-so-bad driving out the medium driving out th

18、e not-so-good driving out the good in such a sequence of events that no market exists at all. One can assume that the demand for used automobiles depends most strongly upon two variables the price of the automobile p and the average quality of used cars traded, a, or Q = D (p, A). Both the supply of

19、 used cars and also the average quality p will depend upon the price, or p=j (p) and S=S(p). And in equilibrium the supply must equal the demand for the given average quality, or S(p) = D (p, p (p). As the price falls, normally the quality will also fall. And it is quite possible that no goods will

20、be traded at any price level. Such an example can be derived from utility theory. Assume that there are just two groups of traders: groups one and two. Give group one a utility function nU1 = M+ Xi i=1where M is the consumption of goods other than automobiles, X1 is the quality of the I.T.H automobi

21、le, and N is the number of automobiles. Similarly, let nU2 = M+ X3/2Xi i=1where M, X1, and N are defined as before. Three comments should be made about these utility functions: (1) without linear utility (say with logarithmic utility) one gets needlessly mired in algebraic complication. (2) The use

22、of linear utility allows a focus on the effects of asymmetry of information; with a concave utility function we would have to deal jointly with the usual risk variance effects of uncertainty and the special effects we wish to discuss here. (3) U1 and U2 have the odd characteristic that the addition

23、of a second car, or indeed a KTH car, adds the same amount of utility as the first. Again realism is sacrificed to avoid a diversion from the proper focus. To continue, it is assumed (1) that both type one traders and type two traders are Von Neumann Morgenstern maximizers of expected utility; (2) t

24、hat group one has N cars with uniformly distributed quality x, 0x lD1=O / p p D2 =0 3/2 p and S2 =0. Thus total demand D (p, ) is D (p, ) = (Y2+ Y1)/P if p D (p, ) = Y2/p if p 3/2. However, with price p, average quality is p/2 and therefore at no price will any trade take place at all: in spite of t

25、he fact that at any given price between 0 and 3 there are traders of type one who are willing to sell their automobiles at a price which traders of type two are willing to pay. C. Symmetric Information The foregoing is contrasted with the case of symmetric information. Suppose that the quality of al

26、l cars is uniformly distributed, Ox1S(p)=O p1. And the demand curves are D(p) = (Y2+May)/P p1 D(p) = (Y2/p) lp 3/2. In equilibrium p=1 if Y2N P=Y2/N if 2Y2/3NY2 p =3/2 if N2Y2/3. If N Y2, in which case the income of type two traders is insufficient to buy all N automobiles, there is a gain in utilit

27、y of Y2/2 units.Finally, it should be mentioned that in this example, if traders of groups one and two have the same probabilistic estimates about the quality of individual automobiles though these estimates may vary from automobile to automobile(3), (4), and (5) will still describe equilibrium with

28、 one slight change: p will then represent the expected price of one quality unit. III. EXAMPLES AND APPLICATIONS A.Insurance It is a well-known fact that people over 65 have great difficulty in buying medical insurance. The natural question arises: why doesnt the price rise to match the risk? Our an

29、swer is that as the price level rises the people who insure themselves will be those who are increasingly certain that they will need the insurance; for error in medical check-ups, doctors sympathy with older patients, and so on make it much easier for the applicant to assess the risks involved than the insurance company. The result is that the average medical condition of insurance applicants deteriorates as the price level rises with the result that no insurance sales may take place at any price. This is strictly analogous to our auto