Economics Dictionary of ArgumentsHome
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| Arbitrage: Arbitrage in economics refers to the practice of exploiting price differences of the same asset or commodity in different markets to make a profit. Traders buy low in one market and sell high in another, ensuring risk-free profits. Arbitrage helps equalize prices across markets and maintain market efficiency. See also Prices, Profit, Trade, Market._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Arbitrage - Dictionary of Arguments
Rothbard III 829 Arbitrage/Rothbard: Arbitrage gains tend to eliminate themselves and to bring about equilibrium. Arbitrage will restore the exchange rate between e.g., silver and gold to its purchasing power parity. >Purchasing power parity/Rothbard, >Near money/Rothbard. The fact that holders of gold increase their demand for silver in order to profit by the arbitrage action will make silver more expensive in terms of gold and, conversely, gold cheaper in terms of silver. The exchange rate is driven in the direction of e.g., 1:2. Purchasing power: Furthermore, holders of commodities are increasingly demanding gold to take advantage of the arbitrage, and this raises the purchasing power of gold. In addition, holders of silver are buying more commodities to make the arbitrage profit, and this action Iowers the purchasing power of silver. Hence the ratio of the purchasing powers moves from 1 in the direction of 1:3. The process stops when the exchange rate is again at purchasing power parity, when arbitrage gains cease. >Equilibrium/Rothbard._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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