Law of One Price

The Law of One Price states that in an efficient market, identical goods should sell for the same price when expressed in a common currency, regardless of where they are sold. This concept relies on the idea that if a product is cheaper in one location, people will buy it there, increasing demand and driving prices up, while lowering demand in the more expensive location, which will drop prices. Thus, over time, prices will converge to equal levels, assuming no barriers exist, such as taxes or transportation costs.