The law of one price states that disregarding trade barriers and transportation costs identical goods sold in competitive markets should cost the same everywhere when prices are expressed in the same currency.

Question

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The law of one price asserts that in the presence of a competitive market structure, and absent transportation costs and tariffs, identical goods should have the same price when expressed in a common currency, as arbitrage would eliminate price differences.

The Law of One Price States That Disregarding Trade Barriers