The Market for Lemons car. This, in turn, motivates the owners of moderately good cars not to sell, and so on. The result is that a market in which there is asymmetric information with respect to quality shows characteristics similar to those described by Gresham's Law: the bad drives out the good. (Although Gresham's principle applies more specifically to exchange rates, modified analogies can be drawn.) Akerlof considers a situation in which demand "D" for used cars depends on the cars price "p" and quality "µ" = "µ"("p") and the supply depends on price alone. Economic equilibrium is given by "S"("p") = "D"("p","µ") and
Economic secession The exchange of goods and money creates the flow of energy within an economic system. "In society, initially innovation drives the changes and innovation creates the building blocks which allow the next stages of social and economic development." If individuals or companies decrease their spending on innovation, the energy into the economic system will decline. Economic secession withdraws capital that leads to innovation and economic prosperity in society. Economic secession Economic secession has been variously defined by sources. In its narrowest sense, it is abstention from the state’s economic system – for instance by replacing the use of government money