George Akerlof provides a wonderful example of how asymmetric information is important for understanding markets for used goods. In the lemons model, the owners of used cars have an informational advantage over potential buyers with respect to the quality of their vehicles. However, all superficially similar cars being different in fact must trade at the same price because cars are indistinguishable from each other. Therefore, owners of bad cars will try to sell them to unsuspecting buyers while owners of good cars will hold on to theirs. Consequently, adverse selection leads to that the quality of traded automobiles should be sub-average, and the price will be lower. As the cycle is repeated, the market becomes increasingly saturated with lower quality cars and even the market disappears.

Abstract
1.Introduction
2.Theoretic Analysis
3. Empirical Studies
3.1Analysis In The View of Supply
3.1.1 The Unexpanded Market for ‘Lemons’
3.1.2 The Expanded Market For ‘lemons’
3.2 Analysis In The View of Demand
3.2.1 ‘Signaling’ of Sellers
3.2.2 ‘Screening’ of buyers
3.2.3 Institution Design of Government
Conclusion
References

Akerlof, George. “The Market for Lemons: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics, 1970, 84, pp. 488-500.
McKenna, C. J. “The Economics of Uncertainty,” Wheatsheaf Books Ltd, 1986.
Winand Emons and George Sheldon. “The Market for Used Cars: A New Test of the Lemons Model, ” Journal of Economic Literature Classification Numbers: C41, D82, L15, L62.
平新乔，郝朝艳. 假冒伪劣与市场结构, 北京大学中国经济研究中心讨论稿，No.C2001009
陶长琪. 信息经济学, 经济科学出版社，2001.