Few bad apples or plenty of lemons: which makes it harder to market plums?

We analyse a competitive commodity market with a large number of buyers
and sellers where: a. Individual qualities, either high or low, are not observable
by buyers; b. Sellers strategically announce prices and buyers decide whether
to buy having observed sellers’ actions. We find that the set of robust equilibria includes only fully separating equilibria. In any robust equilibrium the low
quality is always traded. The high quality is traded if demand is sufficiently
strong, so that low quality sellers are unable to satisfy all buyers, and is never
traded otherwise. Hence, few rotten apples is better than a plentiful of lemons
for plums’ sellers