Law of One Price Law and Legal Definition

Law of One Price is a rule stating that in an efficient market all identical goods must have only one price. For example, a given security must have the same price regardless of the means by which one goes about creating that security. This implies that if the payoff of a security can be synthetically created by a package of other securities, the price of the package and the price of the security whose payoff it replicates must be equal.