The Law of One Price

The Law of One Price states that in an efficient market, identical goods should sell for the same price when there are no transportation costs or barriers to trade. If a product costs different amounts in two places, people will buy it where it's cheaper and sell it where it's more expensive, prompting prices to equalize over time. This principle helps explain why prices for goods, like stocks or commodities, tend to converge globally, reflecting supply and demand dynamics. It underlines the idea that markets are interconnected and competition drives price uniformity.