In markets where information on quality is difficult to acquire, assess, and/or trust, you tend to get two results:
- Low-quality products flood the market. This leads buyers to assume lower-value products, and hence ...
- High-quality products are consistently under-priced. This leads those offering higher-value products to withdraw from the market, or to offer those products (or services) only in limited sub-markets where full value is more likely to be obtained.
The problem is a broad one, and long-predates used-car sales. There was a popular late-19th century book David Harum (1898) by Edward Noyes Westcott. All but forgotten today, it was a bestseller at the time and spun off several related franchises, including a 1934 film and 1936 radio serial. The title character was a horse trader, the profession which previously held a similar status to used-car salesman.
In markets where information on quality is difficult to acquire, assess, and/or trust, you tend to get two results:
- Low-quality products flood the market. This leads buyers to assume lower-value products, and hence ...
- High-quality products are consistently under-priced. This leads those offering higher-value products to withdraw from the market, or to offer those products (or services) only in limited sub-markets where full value is more likely to be obtained.
The problem is a broad one, and long-predates used-car sales. There was a popular late-19th century book David Harum (1898) by Edward Noyes Westcott. All but forgotten today, it was a bestseller at the time and spun off several related franchises, including a 1934 film and 1936 radio serial. The title character was a horse trader, the profession which previously held a similar status to used-car salesman.
<https://en.wikipedia.org/wiki/David_Harum>