Volume 10, No. 1 (Spring 2007)
The law of one price is one of the most basic laws of economics and yet it is a law observed in the breach. That a given commodity can have only one price, except for the briefest of transitions, seems to be almost an axiom. Economists are bent on considering their subject to be empirically based, yet the most elementary of laws seems to defy empirical confirmation. Would it not be wise to simply admit that economics cannot do without some a priori beliefs? Why has the law been accepted? Can the law be confirmed by data? If not, why is the law still accepted? and what does this acceptance tell us about good economic method?
