Lemon Problems in the Internet Transactions and Relative Strategies

Abstract

Based on some new traits of the Internet environment, this chapter discusses lemon problems in the Internet transactions. It points out that the information asymmetry does not disappear, but develops to be even worse under the new Internet environment. By virtue of mathematical tools, the authors analyze products and services’ lemon problems in the new environment. It is found that many new traits of digital products and services lead to new appearances of “lemon” problems. In the end, relative strategies are provided in order to lessen these problems. The authors further hope that through the discussion, some implications can be made to e-sellers and online service providers.