Akerlof's lemon

An interesting post by Vic Fleischer about how Akerlof’s path-breaking Market for Lemons article was rejected by a major economics journal because the journal “did not publish on topics of such triviality."

There are some comments to the post on the phenomenon involved. Here's another take: the rejecting editors may have been right, based on what they could reasonably have been expected to know at the time (rather than hindsight). This article was either trivial or strikingly original and insightful.  It was logical for at least some editors to draw the former conclusion given that the author was an assistant professor submitting his first article. Same for Einstein’s early work and for Coase’s theory of the firm – works by junior authors challenging accepted wisdom. 

In other words, I think the initial rejection of Akerlof’s article was an example of the market working.  Given that we know now that the article was Nobel-worthy, universal initial acceptance might have meant that the editors weren’t screening properly and were accepting articles they didn’t understand. (Of course this never happens in the world of law review publishing.) Moreover, the fact that the article ultimately was accepted and widely recognized despite its dubious provenance indicates a deep and competitive market for knowledge. 

The more general lesson is that, if we’re now over-inclined to assume that this shows a market failure, perhaps Akerlof was too successful.