Law of one price
Concept in economics / From Wikipedia, the free encyclopedia
For the music album by Echoterra, see The Law of One.
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]