I say no, though a perfect market where there are no inefficiencies at all is mainly an ideal and may exist only for a instant at a time. So, what I'm saying is that when a specific inefficiency disappears, it is highly likely that another inefficiency happens to be appearing elsewhere at the same time. Are they necessarily connected? No, but you can almost count on there being the appearance of one leading to the other in many instances.
Nonsense. This implies there are are fixed number of market inefficiencies and due to some strange phenomenon this equillibrium must be maintained.
It may or may not lead to the creation of another efficiency, so the answer to your specific question is no. Here is an example where another efficiency is created. A new MarketMaker enters the market offering tighter spreads and making the market more efficient at MarketMaking, yet traders on the whole are able to get fills more easily. An example where another efficiency is probably not created might be this. A successful large volume dip buy trader enters a new market buying short term dips at multiple entries. Some existing dip buyers find it harder to get filled especially at deep discounts and some profit is eroded. Short traders might get better fills now BUT, since the dipbuy trader is deemed 'successful' then any system which fades his must still be unsuccessful. So while some efficiency is created its not enough to trade and no one does. OK I have a question for all of you. Is the market essentially an efficient beast which is occassionally made inefficient by the fads, fashions and nuances of trading, or is it basically an inefficient beast which exhibits some degree of randomness when an inefficiency is fully exploited?