Cycles and multiple equilibria in the market for durable lemons (Q1852678)

The authors present their latest dynamic model of the market of durable commodities, tracing back to the Akerlof's (1970) markute failure model of ``durable lemons'' (used cars). Under asymmetric information, identical cohorts of goods with identical (but arbitrary) distribution of quality; enter the market. The main result is that for any distribution of quality there exist an infinite number of cyclical equilibria where all goods are traded within finite time after they have entered the market. A full version of the paper with detailed proofs is available on http://www.few.eur.nl/few/people/janssen.