Question

Describe three market-based solutions to address asymmetric information.

Answer 1

Asymmetric information refers to the mismatch in information between the two market players, buyers and sellers.

Three market based solutions to address this problem are:

1. Asking producers to provide gaurantees, warranties and after sale service for products. This will make consumers confident about the product quality.

2. Monitoring each other through market reports and surveys to keep an eye on each other's credibility

3. Get products verified by external product verification so as to be sure of the product quality.