Differences Quote by Frank Knight
“Goods move in response to price differences from points of low to points of higher price, the movement tending to obliterate the price difference and come to rest.”
About This Quote
Source Treatise: “Risk, Uncertainty, and Profit” by Frank Knight, 1921
Prices adjust through trade, reducing differences until equilibrium is reached, eliminating profit opportunities.
In simple terms: Trade balances price differences.
Understand market dynamics.
Themes
Mood
Type
When to use this quote
- business pricing
- commodity markets
- policy making
- investment decisions
Key Concepts
Questions to Reflect On
- What factors prevent perfect price equalization?
- How does speculation affect this process?
Markets may not fully correct due to frictions or information asymmetry.