law of one price การใช้

• Spot future parity is an application of the law of one price.
• Exchange-rate pass-through is also related to the law of one price and purchasing power parity.
• When a commodity is for sale at multiple locations, the law of one price is generally believed to hold.
• Another effect of the common European currency is that differences in prices in particular in price levels should decrease because of the law of one price.
• By the law of one price, entirely tradable goods cannot vary greatly in price by location ( because buyers can average price levels are typically high.
• The intuition behind the law of one price is based on the assumption that differences between prices are eliminated by market participants taking advantage of arbitrage opportunities.
• He also contributed foundational contributions to behavioral economics, and provided the intellectual foundation for the understanding of deviations from the law of one price based on the irrationality of investors.
• Since there are no transaction costs or currency issues the law of one price applies to both commodities, and consumers in either country pay exactly the same price for either good.
• This is due to the economic law of one price which states " that if trade were free, then identical goods should sell for about the same price throughout the world ".
• In general, arbitrage ensures that " the law of one price " will hold; arbitrage also equalises the prices of assets with identical cash flows, and sets the price of assets with known future cash flows.
• It is usual to argue that market efficiency implies that there is only one price ( the " law of one price " ); the correct risk-neutral measure to price which must be selected using economic, rather than purely mathematical, arguments.
• The law of one price only prevails where there are no transaction costs, because otherwise there will be situations where it isn't worth a buyer seeking out that lower price because it will cost them more to transact to the seller than the difference in price ( transport costs over a distance is the simple example ).
• The law of one price constitutes the basis of the theory of purchasing power parity, an assumption that in some circumstances ( for example, as a long-run tendency ) it would cost exactly the same number of, for example, US dollars to buy euros and then to use the proceeds to buy a market basket of goods as it would cost to use those dollars directly in purchasing the market basket of goods.
• In theory, the law of one price would hold that if, to take an example, the Canadian dollar were to be significantly overvalued relative to the U . S . dollar according to the Big Mac Index, that gap should be unsustainable because Canadians would import their Big Macs from or travel to the U . S . to consume them, thus putting upward demand pressure on the U . S . dollar by virtue of Canadians buying the U . S . dollars needed to purchase the U . S .-made Big Macs and simultaneously placing downward supply pressure on the Canadian dollar by virtue of Canadians selling their currency in order to buy those same U . S . dollars.