The Law of One Price: Survey of a Failure

This paper aims to survey the literature about the Law of One Price in order to document its failure in terms of actual application. After a brief theoretical overview, which starts from classical economists’ thought, the reported literature has been classified on the basis of three main streams: pricing-to-market (also considering investigations about differences between domestic and export prices), national borders, and tradability of goods. Reviewed works have been selected in order to provide a dedicated survey for “the Law”, which is absent in previous works about this topic. Therefore, the investigation has been kept intentionally separate from PPP-related debate.