Economics Doing Business in Emerging Essay

Open, View, and/or
Download this Document

Total Length: 804 words ( 3 double-spaced pages)

Total Sources: 0

Page 1 of 3

This can help to alleviate the asymmetry of information between them. If sellers do that consistently, then buyers will gain trust in the sellers that price is in fact related to quality. When that happens, the market can function because buyers can be fairly certain of their utility.

What this refers to is the cost of dishonesty. In used cars, dishonesty will drive away business, so any car lot with an interest in long-term success must ensure that the costs of dishonesty are reduced by reducing dishonesty itself. He then likens the lemon market to the cost of doing business in a country with high levels of corruption. Firms are discouraged from investing in places where information asymmetry means that they cannot distinguish between a good business opportunity and a scam. Thus, again, encouraging a lack of corruption would be the best pathway to successful business promotion, just as it is on a used car lot.

Conclusion

Akerhof shows with the used car example how high the costs of dishonesty can be. For those in public policy or in business, this is an important finding. When dishonesty is likened to information asymmetry, the economic implications become clear -- there are high costs associated with dishonesty, and this holds a lot of countries back. He argues that if honesty is implemented, the market will grow stronger.

Stuck Writing Your "Economics Doing Business in Emerging" Essay?

View All Our Example Economics Doing Business in Emerging Essay

Have A Custom Example Essay Written



As consumers trust in the used car lot, or industry for that matter, they are more likely to buy. In response to this reality, the industry has focused on building a link between price and quality. The price signals the quality to the consumer. Without that link, the consumer would not be able to differentiate between a high quality vehicle and a low quality one. The result is market failure. When the link is created, consumers can trust that an expensive vehicle is a high cost one, and a cheap vehicle is a low cost one. This creates enough trust to have a functioning market for used cars.

When applied to developing nations, it becomes clear that there are high costs associated with corruption, primarily in lost business. Any firm that cannot protect its interests in some way will not enter the market, for fear of being ripped off. Remove this fear and you remove a significant barrier to investment. A more robust environment….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Economics Doing Business In Emerging" (2012, April 16) Retrieved June 4, 2026, from
https://www.aceyourpaper.com/essays/economics-doing-business-emerging-56267

Latest MLA Format (8th edition)

Copy Reference
"Economics Doing Business In Emerging" 16 April 2012. Web.4 June. 2026. <
https://www.aceyourpaper.com/essays/economics-doing-business-emerging-56267>

Latest Chicago Format (16th edition)

Copy Reference
"Economics Doing Business In Emerging", 16 April 2012, Accessed.4 June. 2026,
https://www.aceyourpaper.com/essays/economics-doing-business-emerging-56267
   

Open, View, and/or
Download this Document
order custom essay example