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The Barbie movie is more than a bit of good fun. It also teaches an economics lesson about lemons—the old slang term for defective goods, not the citrus fruit. The movie’s popularity has boosted the market for vintage Barbie dolls, not all of which are authentic. This uncertainty depresses their value, harming both buyers and sellers. Where the movie is about self-discovery and being authentic to yourself, the vintage Barbie market is about finding ways to trust others and verify their authenticity. Markets run on trust, and the vintage Barbie market is an excellent real-world example.

After seeing the movie, one of us was feeling gallant and wanted to score points with his spouse. He scouted around online and found an original Sunset Malibu Barbie from 1971.

The eBay seller indicated its NRFB status, which in collector’s lingo means “never removed from box.” And sure enough, the doll arrived intact in the unopened blister pack, albeit dinged up a little over the past 53 years. But the sealed Sunset Malibu Barbie was surely the right choice. Many of the loose Barbies on eBay were in sad shape. At least one smelled, as its seller allowed, like a box of crayons.

Your obedient Barbie shopper also happens to be a moderate accumulator of original “Redline” Hot Wheels diecast cars with capped wheels and heavy metal bases that were issued only from 1968 to 1977. Fun fact: the creators of Hot Wheels and Barbie were husband and wife.

In either Mattel quest, a vintage doll or car in mint blister pack can be a very expensive thing, because that packaging helps verify the goods are authentic. Even less-popular, routine issues of Redline Hot Wheels still sealed in their cardboard/plastic pack can go for several hundred dollars. More coveted ones cost thousands.

“New” cars or Barbies not in original packaging are sometimes beaters that have been restored to look new. While this may seem like a good thing, much like polishing old coins, restoration actually reduces an original car's value. The rise of 3D printing makes this sort of part-replacement process easier than ever.

This situation resembles the dilemma economist George Akerlof presented in his famous 1970 paper "Market for Lemons."

Some markets have asymmetric information. This means that the customer knows less than the seller does about the quality of, say, a car (in Akerlof’s telling, real cars, not Mattel). That uncertainty means customers are less willing to pay full price for something that might turn out to be a lemon. The less trust consumers have, the less they’re willing to pay.

Often, they are only willing to pay the average price when they cannot distinguish a sub-par from high quality offering. The problem is that that’s great for lemon sellers—or in our case, sneaky resto hawkers of die cast Hot Wheels or vintage Barbies; but it punishes authentic sellers, who have a hard time finding buyers willing to pay full price for authentic goods. In many cases, authentic sellers won’t bother selling at all, which makes it harder for consumers to find collectables they seek. Lemon-related price declines decrease the supply of authentic vintage toys.

Akerlof was onto something. The Barbie search reinforced what we’d suspected about classic Redlines. Finding genuinely deadstock specimens is a challenge. Some sellers are open about their restorations of original castings. But other sellers seem more suspect, selling replacement parts alongside seemingly pristine cars or dolls. The eBay rating system helps, but wily vendors can play rating systems like an instrument. 

The free market solution, of course, is to save your money, not patronize potential fake sellers, and choose instead from among the dwindling supply of mint-on-card offerings. But you’d need a second mortgage to sustain the quest for mint collectibles.

For middling cars in better shape than beaters, a little additional free-market creativity is needed. Every day there are fewer original Redlines thanks to the do-gooders polishing these “coins” and restoring them. Inadvertently or not, they are reducing the supply of original, unretouched Redlines.

As more restored cars flood the market, collectors may be increasingly better off seeking out lightly worn but more obviously genuine specimens. These are relatively easy to distinguish, given their uniform wear and handful of red flags to look out for. These cars may not be as aesthetically pleasing as someone’s real or fake “blister pull,” but they have something that restored cars and dolls lack—an authenticity becoming scarcer. 

One can rationalize the settling for second-best by recognizing that a genuine, worn car has a story to tell. It has survived years of play, wear and tear, and has presumably been well-loved by its previous owners. Some eBay sellers happily share their history of dad’s attic collection of Hot Wheels. We can tell ourselves that this legacy gives the better-than-beater but non-mint car a unique character and history that a restored car can never replicate.

That may not be entirely satisfactory as far as avoiding lemons goes, but one can take some satisfaction in the likelihood that, as the number of restored cars increases, the value of genuine, worn cars will increase over time.

Ironically, it gets even better for the astute used Redline collector. As the capability to fake the blister packs grows, buyers may become increasingly skeptical of even sealed items and fear that inferior products, a newer level of "lemons," are getting passed off by sellers as the off-the-assembly-line real deal. 

Even though worn-but real cars and dolls may not be pristine, they can still be in good shape and hold significant value that can surge, as happened after the Barbie movie—and again if Hollywood makes a Hot Wheels movie. In solidarity with the Malibu Sunset Barbie, nearby is a display of certified non-lemon Hot Wheels Redlines, in Spectraflame Nuclear Hot Pink.

By focusing on authenticity rather than strictly appearance, collectors can protect themselves and squeeze out lemons.

Wayne Crews is the Fred L. Smith, Jr. Fellow in Regulatory Studies and Ryan Young the Senior Economist at the Competitive Enterprise Institute.

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