Akerlof considered the problem of bad quality cars driving good quality cars out of the market in his classic “The Market for Lemons” (1970) because of the presence of asymmetrical information between buyers and sellers.[36] Spence explained that signaling was fundamental in the labour market, because since employers can't know beforehand which candidate is the most productive, a college degree becomes a signaling device that a firm uses to select new personnel.[37] A synthesising paper of this era is “Externalities in Economies with Imperfect Information and Incomplete Markets” by Stiglitz and Greenwald:[38] the basic model consists of households that maximise a utility function, firms that maximise profit—and a government that produces nothing, collects taxes, and distributes the proceeds. An initial equilibrium with no taxes is assumed to exist, a vector x of household consumption and vector z of other variables that affect household utilities (externalities) are defined, a vector π of profits is defined along with a vector E of households expenditures. Since the envelope theorem holds, if the initial non taxed equilibrium is Pareto optimal then it follows that the dot products Π (between π and the time derivative of z) and B (between E and the time derivative of z) must equal each other.