13. Signaling TYPE OF CAR EXPECTED VALUE TO A SELLER(IN $) WILLINGNESS TO PAY BY A BUYER (IN $) SIGNALING COST (IN $) WHAT BUYER PAYS (IN $) Lemon 1000 1200 No signaling cost 1500 (as calculated earlier) Peach 2000 2400 No signaling Cost Driven out of market AFTER SIGNALING Lemon 1000 1200 1200 Will be sold as peaches only Peach 2000 2400 200 2400