The law of one price states that, in competitive markets free of transportation costs and official barrier to trade, identical goods sold in different countries must sell. For the same price when their prices are expressed in terms of the same currency.

If the law didn't hold, then what would happen to international trade? Discuss.

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If the law of one price did not hold it would imply that identical goods sold in different countries would not have the same price when expressed in terms of the same currency In such a scenario inter... View the full answer