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Journal of Economic Perspectives: Vol. 17 No. 4 (Fall 2003)
JEP Volume. 17, Issue 4 | 
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Anomalies: The Law of One Price in Financial Markets
Article Citation
Lamont, Owen A., and
Richard H. Thaler. 2003. "Anomalies: The Law of One Price in Financial Markets."
The Journal of Economic Perspectives,
17(4): 191-202.
DOI: 10.1257/089533003772034952
DOI: 10.1257/089533003772034952
Abstract
The Law of One price states that identical goods (or securities) should sell for identical prices. In financial markets the law of one price is thought to hold almost exactly, and is the basis for much of financial economic theory. We present evidence on several examples of violations of this law, including closed-end country funds, twin shares, dual class shares, and corporate spinoffs. We analyze the causes of these violations, and show they all stem from some limits on the extent to which rational arbitrageurs can intervene.
Article Full-Text Access
Full-text Article (Complimentary)
Authors
Lamont, Owen A.
Thaler, Richard H.
Thaler, Richard H.
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