[additional citation(s) needed] The intuition behind the law of one price is based on the assumption that differences between prices are eliminated by market participants taking advantage of arbitrage opportunities.
Both scenarios result in a single, equal price per homogeneous good in all locations.
[8] In either case moving away from the prevailing price would either leave no takers, or be charity.
In the derivatives market the law applies to financial instruments which appear different, but which resolve to the same set of cash flows; see Rational pricing.
For example, if an option can be created using two different sets of underlying securities, then the total price for each would be the same or else an arbitrage opportunity would exist.A similar argument can be used by considering arrow securities as alluded to by Arrow and Debreu (1944).