market integration and convergence to the law of one price case china by li na 20 04 2002 contents introduction theoretical background literature review data methodology result a basic statistics b test for stationarity estimating rates c panel unit root tests with seasonal individual specific fixed effects appendix table1 6 commodity list references 1 in perfectly competitive forces supply demand produce single equilibrium good or service if did not prevail someone could get rich buying low selling at higher thereby driving prices equality however so called is large measure guaranteed assumption perfect information zero transactin cost elimination all forms government regulations which consequently acts as an index efficiency resources allocation competition applied international marketplace purchasing power parity ppp states that two different countries should be equal each other when expressed terms same currency imperfections such entrenched monopolies
