Economics at your fingertips  

Anomalies: The Law of One Price in Financial Markets

Owen Lamont and Richard Thaler

Journal of Economic Perspectives, 2003, vol. 17, issue 4, 191-202

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.

Date: 2003
Note: DOI: 10.1257/089533003772034952
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Journal of Economic Perspectives is currently edited by Enrico Moretti

More articles in Journal of Economic Perspectives from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().

Page updated 2019-07-29
Handle: RePEc:aea:jecper:v:17:y:2003:i:4:p:191-202