Transaction costs and market frictions make arbitrage impossible between certain markets

the verdict

SUPPORTED

the evidence backs this

Recorded sources

3 sources for · 0 against

Counts group repeated records of the same source within each side. They do not measure evidence strength or source independence.

Transaction costs and market frictions act as significant barriers that prevent efficient price convergence and make complete arbitrage impossible between certain markets.

The analysis

The claim is a well-established economic principle stating that when transaction costs and market frictions exceed potential arbitrage profits, arbitrage ceases to be profitable or possible. The retrieved papers (e.g., 0, 2, 5) provide empirical and theoretical backing showing how transaction costs, transportation hurdles, and financial frictions create persistent wedges between markets.

Evidence for · 3

Social capital and transaction costs in millet markets.

Recorded source metadata

Jacques DC, Marinho E, d'Andrimont R, Waldner F, Radoux J, Gaspart F, Defourny P. Social capital and transaction costs in millet markets.. 2018. https://doi.org/10.1016/j.heliyon.2018.e00505

Paper 0 establishes that significant transaction costs in regional markets obstruct market integration and efficient access.

Source citation format

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More for · 2

Financial frictions and stock return: A novel least minus more frictional factor for asset pricing models in emerging economies.

Recorded source metadata

Khan S, Shoaib A, Aftab R, Yasir M, Saeed MB. Financial frictions and stock return: A novel least minus more frictional factor for asset pricing models in emerging economies.. 2025. https://doi.org/10.1371/journal.pone.0325917

Paper 2 demonstrates that financial frictions across markets significantly impact returns and pricing anomalies.

Source citation format

Financial Intermediation and Fire Sales with Liquidity Risk Pricing

Recorded source metadata

Cheng Y, Robatto R. Financial Intermediation and Fire Sales with Liquidity Risk Pricing. 2023. https://doi.org/10.2139/ssrn.4486243

Paper 5 models how liquidity shocks and market frictions restrict asset reselling capabilities and arbitrage efficiency.

Source citation format

The paper trail · every fact has a biography

first checked01 Aug 2026

judged → SUPPORTED · 7701 Aug 2026

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