Law of one price

The law of one price (LOOP) states that in the absence of trade frictions (such as transport costs and tariffs), and under conditions of free competition and price flexibility (where no individual sellers or buyers have power to manipulate prices and prices can freely adjust), identical goods sold in different locations must sell for the same price when prices are expressed in a common currency.^[1]^[2]^[3]^[4]^[5]^[6]^[7] This law is derived from the assumption of the inevitable elimination of all arbitrage.^{[additional citation(s) needed]}

^ Feenstra, Robert. International .There is a basic principle in economics called "the law of one price". This states that identical goods should have identical prices. For example, an ounce of silver should cost the same in the New York and Paris, otherwise silver would flow from one city to the other. Of course, this law does not always hold in practice, unless there are competitive markets, no transaction costs and no trade barriers...
^ "Law of one price Definition". NASDAQ. Retrieved 3 December 2015. An economic rule stating that a given security must have the same price no matter how the security is created. If the payoff of a security can be synthetically created by a package of other securities, the implication is that the price of the package and the price of the security whose payoff it replicates must be equal. If it is unequal, an arbitrage opportunity would present itself.
^ "law of one price". Cambridge University Press 2015. Retrieved 3 December 2015. ECONOMICS[:] [T]he principle that in a perfect financial market goods would have the same price everywhere[.]
^ "Law of One Price Definition". Investopedia. Retrieved 3 December 2015. The theory that the price of a given security, commodity or asset will have the same price when exchange rates are taken into consideration. The law of one price is another way of stating the concept of purchasing power parity[...]The law of one price exists due to arbitrage opportunities. If the price of a security, commodity or asset is different in two different markets, then an arbitrageur will purchase the asset in the cheaper market and sell it where prices are higher[...]When the purchasing power parity doesn't hold, arbitrage profits will persist until the price converges across markets.
^ Cite error: The named reference InvestorWords was invoked but never defined (see the help page).
^ Rashid, Salim (Spring 2007). "The "Law" of One Price: Implausible, Yet Consequential". Quarterly Journal of Austrian Economics. 10 (1): 79. doi:10.1007/s12113-007-9001-7. S2CID 17745635. The law of one price (hereafter LoP) is one of the most basic laws of economics and yet it is a law observed in the breach. That a given commodity can have only one price, except for the briefest of [disequilibrium] transitions, seems to be almost an axiom...
^ Mankiw, N. G. (2011). Principles of Economics (6th ed.). Mason, OH: South-Western Cengage Learning. Page 686.

[1] Feenstra, Robert. International .There is a basic principle in economics called "the law of one price". This states that identical goods should have identical prices. For example, an ounce of silver should cost the same in the New York and Paris, otherwise silver would flow from one city to the other. Of course, this law does not always hold in practice, unless there are competitive markets, no transaction costs and no trade barriers...

[NASDAQ-2] "Law of one price Definition". NASDAQ. Retrieved 3 December 2015. An economic rule stating that a given security must have the same price no matter how the security is created. If the payoff of a security can be synthetically created by a package of other securities, the implication is that the price of the package and the price of the security whose payoff it replicates must be equal. If it is unequal, an arbitrage opportunity would present itself.

[Cambridge-3] "law of one price". Cambridge University Press 2015. Retrieved 3 December 2015. ECONOMICS[:] [T]he principle that in a perfect financial market goods would have the same price everywhere[.]

[Investopedia-4] "Law of One Price Definition". Investopedia. Retrieved 3 December 2015. The theory that the price of a given security, commodity or asset will have the same price when exchange rates are taken into consideration. The law of one price is another way of stating the concept of purchasing power parity[...]The law of one price exists due to arbitrage opportunities. If the price of a security, commodity or asset is different in two different markets, then an arbitrageur will purchase the asset in the cheaper market and sell it where prices are higher[...]When the purchasing power parity doesn't hold, arbitrage profits will persist until the price converges across markets.

[InvestorWords-5] Cite error: The named reference InvestorWords was invoked but never defined (see the help page).

[AustrianHeterodoxEconomics1-6] Rashid, Salim (Spring 2007). "The "Law" of One Price: Implausible, Yet Consequential". Quarterly Journal of Austrian Economics. 10 (1): 79. doi:10.1007/s12113-007-9001-7. S2CID 17745635. The law of one price (hereafter LoP) is one of the most basic laws of economics and yet it is a law observed in the breach. That a given commodity can have only one price, except for the briefest of [disequilibrium] transitions, seems to be almost an axiom...

[7] Mankiw, N. G. (2011). Principles of Economics (6th ed.). Mason, OH: South-Western Cengage Learning. Page 686.

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