The argument that xyz can't be the case because it would be arbitraged away is called the "invisible handwave". It should be part of the list of common rhetorical fallacies IMO.

Whether something will be subject to arbitrage is sensible to a ton of factors (barriers to entry, market structure, political environment/incentives, behavioral biases) that if something is to be arbitraged or not is purely an empirical question for any instance of the problem.