It's not the traditional economics framework but having read Akerlof's paper, I can read the title of this post and understand what they mean.
There's a very real phenomena where markets often start out functional and then descend into a market for lemons, and it has to do with game theory again. When the market is small and still growing, firms in it can count on repeat interactions. Even if your customers don't buy from you again, there are new customers, who often ask the existing customers what they should buy, and so you have an incentive to produce a good product. The information asymmetry that Akerlof describes doesn't exist, because actual experiences with the products quickly get conveyed to other market participants and incorporated into their purchase decisions.
But when the market matures, those repeat interactions (and prospect of future sales) decline. People who have repeated needs and vendors they can trust often exit the market and deal directly with their vendors. What's left are buyers who are not particularly well-connected and don't have a whole lot of information on past experiences with the product, but who trust the market as a whole. This is the kind of information asymmetry that breeds a market for lemons. Eventually all products start becoming crap, everyone who knows how to find non-crap exits the marketplace, and the market collapses.
There's a very real phenomena where markets often start out functional and then descend into a market for lemons, and it has to do with game theory again. When the market is small and still growing, firms in it can count on repeat interactions. Even if your customers don't buy from you again, there are new customers, who often ask the existing customers what they should buy, and so you have an incentive to produce a good product. The information asymmetry that Akerlof describes doesn't exist, because actual experiences with the products quickly get conveyed to other market participants and incorporated into their purchase decisions.
But when the market matures, those repeat interactions (and prospect of future sales) decline. People who have repeated needs and vendors they can trust often exit the market and deal directly with their vendors. What's left are buyers who are not particularly well-connected and don't have a whole lot of information on past experiences with the product, but who trust the market as a whole. This is the kind of information asymmetry that breeds a market for lemons. Eventually all products start becoming crap, everyone who knows how to find non-crap exits the marketplace, and the market collapses.