when dealing in commodities or any physical good the cost to transport them must be included resulting in different prices when commodities from two different locations are examined 
if the difference in transportation costs does not account for the difference in commodity prices between regions it can be a sign of a shortage or excess within a particular region this applies to any good that must be physically transported from one geographic location to another rather than just transferred in title from one owner to another it also applies to wages for any employment where the worker must be physically present at the worksite to perform the job because transaction costs exist and can vary across different markets and geographic regions prices for the same good can also vary between markets where transaction costs such as the costs to find an appropriate trading counterparty or costs to negotiate and enforce a contract are higher the price for a good will tend to be higher there than in other markets with lower transaction costs legal barriers to trade such as tariffs capital controls or in the case of wages immigration restrictions can lead to persistent price differentials rather than one price these will have a similar effect to transportation and transaction costs and might even be thought of as a type of transaction cost for example if a country imposes a tariff on the importation of rubber then domestic rubber prices will tend to be higher than the world price because the number of buyers and sellers and the ability of buyers and sellers to enter the market can vary between markets market concentration and ability of buyers and sellers to set prices can vary as well a seller who enjoys a high degree of market power due to natural economies of scale in a given market might act like a monopoly price setter and charge a higher price this can lead to different prices for the same good in different markets even for otherwise easily transportable goods 