Why is there such large differences in bitcoin price between exchanges?

[musiek]

Wouldn't it make sense to stock up on coins via the cheapest exchange and sell them for a profit at the most expensive exchange?

[KonstantinosM]

If you're referring to the "Gox" premium, it is because Gox is flawed.

It will probably die within a few weeks.


Sometimes there are fees on the USD side you have to deal with or trust issues. Each exchange also has it's own buys and sells. If the difference is big enough, people will naturally switch between the exchanges making the price similar. Sites that can't quickly send you the money will usually have a different price.

Person to Person seems to be having a higher rate than exchange to person.

[musiek]

I see. Thanks for the answer.

[coinarch]

To expand on that point, it is just like regular exchanges and lending. Credit risk gets built into the price so sites/exchanges that have high credit risk (ie you might not get your money back) have a risk premium. In this case it means that you'd be more willing to pay more on a trusted exchange rather than spend less to buy at an exchange that may or may not go out of business (eg MtGox).