The law of one price is the basis of purchasing power parity theory. It was proposed by the famous Swedish economist Cassel in 1918, and in 1922 he elaborated theoretical system of purchasing power parity in the book “The currency and foreign exchange after 1914”. The doctrine is that, as long as the same basket of goods and services, in the absence of impacts of tariffs and transport costs, its costs are same in any country, which means that the value of a currency depends on its own purchasing power. The basic proposition of the theory holds that the determinant of the exchange rate is the price level. Purchasing power parity is divided into absolute purchasing power parity and relative purchasing power parity. The former refers that exchange rates between two countries should be equal to the ratio of the relative price level, and the latter refers that the change in exchange rates between two countries is equal to the relative price changes in the level.
Traditional starting point for all the analysis of purchasing power parity is the Law of One Price. Law of One Price is a theory about the relationship between currencies and price levels in different countries. It is based on the following assumptions: Two countries can only produce tradable goods and these goods are homogenized; there are no trade restrictions, such as tariff barriers or transaction costs; no capital mobility; full employment level in the economy and the money market system works well; sufficient arbitrage opportunities exist. Under these conditions, the law of one price was established, formally:
单一价格法则是购买力平价理论的基础上。它是由著名的瑞典经济学家卡塞尔在1918提出的，并在1922他阐述的理论体系，购买力平价书”的货币和外汇1914后”。该学说认为，只要商品和服务的同一个篮子里，在关税和运输成本的影响，缺席的情况下，其成本在任何国家都是相同的，这意味着一种货币的价值取决于它自己的购买力。该理论的基本命题认为，汇率的决定因素是价格水平。购买力平价分为绝对购买力平价和相对购买力平价。前者是指两个国家之间的汇率应该等于相对价格水平的比率，后者是指两个国家之间的汇率的变化等于水平的相对价格的变化。
所有的购买力平价分析传统的出发点是一价定律。单一价格定律是关于货币和在不同国家的价格水平之间的关系的理论。它是基于以下假设：两个国家只能生产贸易商品，这些商品的同质化；没有贸易限制，如关税壁垒或没有交易成本；资本流动；在经济充分就业水平和金融市场体系运作良好；充分的套利机会的存在。在这种情况下，一价定律成立，正式：
