Transaction Costs as a Cause for Deviations from the Law of One Price
Price discrepancies for an identical product across different markets can persist due to transaction costs. These costs, which include shipping fees, currency conversion charges, and other expenses related to executing a trade, create a barrier to arbitrage. When transaction costs are higher than the potential profit from buying low in one market and selling high in another, the price gap is not closed, leading to a violation of the Law of One Price.
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Economics
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The Economy 2.0 Microeconomics @ CORE Econ
CORE Econ
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