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Question: consider a market for used cars there are many sellers...

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Consider a market for used cars. There are many sellers and even more buyers.

A seller values a high quality car at 800 and a low quality car at 200. For any quality, the value to buyers is m times the value to sellers, where m > 1.

All agents are risk-neutral. Sellers know the quality of their own car, but buyers only know that 2/3 of the cars are low quality and the remaining 1/3 of them are high quality.

For what values of m do all sellers sell their used cars?

 

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