This article solves a high-frequency model of price arbitrage incorporating storage and trade when the amount of trade is limited by transport capacity constraints. In equilibrium there is considerable variation in transport prices because transport prices rise when the demand to ship goods...

In contrast to financial arbitrage, which causes prices of economically equivalent transactions to converge in the direction of one price, regulatory arbitrage does not lead to such price convergence. In contrast, regulatory arbitrage tends to produce two different prices for economically...