Thursday, April 19, 2007

The Market for Lemons

This Wired article covers the interesting topic of The Market for Lemons as applied to memory sticks. An annoying aspect of the Lemon Theory is that so often we cannot differentiate between a good buy and a bad one until after we have made the purchase. One solution is to check how good the warranty is - the better the warranty the more likely the product isn't a lemon. But in the cut and thrust world of competition, the company that bothers to provide a good warranty, and therefore probably has the better product, is often the one that folds first because it must charge more for the product at the expense of market share.