Constant shadow prices indicate that gains in expected votes with respect to marginal shifts in transfers should be equal across jurisdictions. The ratio of the scalars (λ/μ) holds constant, while exhausting the budget, only if each party promises the same amount to any given jurisdiction (taj = tbj = Yj ∀ j). Voter consumption is thus identical under either party and implies tj = 0. By the tra...

It is well known that in linear programming, the optimal values of the dual variables can be interpreted as shadow prices (marginal values) of the right-hand-side coefficients. However, this is true only under nondegeneracy assumptions. Since real problems are often degenerate, the output from conventional LP software regarding such marginal information can be misleading. This paper surveys and...

A shadow price is a process S̃ lying within the bid/ask prices S, S of a market with proportional transaction costs, such that maximizing expected utility from consumption in the frictionless market with price process S̃ leads to the same maximal utility as in the original market with transaction costs. For finite probability spaces, this note provides an elementary proof for the existence of suc...

Using data from a large, U.S. federal job training program, we investigate whether enrolment incentives that exogenously vary the ‘shadow prices’ for serving different demographic subgroups of clients influence case workers’ intake decisions. We show that case workers enroll more clients from subgroups whose shadow prices increase but select at the margin weaker-performing members from those su...

In resource accounting, shadow prices of natural resources and environmental effects should be used as the social marginal value of goods. Since it is difficult to measure shadow prices in practice, market prices are often used as proxies for shadow prices. A prerequisite for the use of these proxies is that there is an established relationship between size of the natural resource stock of inte...

This paper estimates a dynamic model of the world oil market and tests whether OPEC countries colluded and whether non-OPEC countries behaved oligopolistically over the period 1970-2004. The model generates estimates of the shadow price of the resource with minimal functional form assumptions. Results support oligopolistic behavior among non-OPEC producers and collusion among OPEC producers exc...

Biodiesel production sustainability relates to decision making on blending involving economic and environmental criteria. Several feedstocks candidate in European countries biodiesel industry, namely different vegetable origin oils. The present research aims at assessing the impact of technological constraints allocated to the decision objectives taking into account ...

Owners of stochastic assets can pool their endowments to smoothen and insure individual payoffs across outcomes and time. We explore, in such a setting, how contingent shadow prices on aggregate resources can be used for three purposes: First, to design mutual contracts for risk averse agents; second, to quantify the malfunctioning of such contracts when there are risk lovers (or scale economie...

We estimate Japanese banking inefficiency and the shadow price of problem loans by treating problem loans as a jointly produced undesirable by-product of the loan production process. Our method uses the directional output distance function of Färe et al. [R. Färe, S. Grosskopf, D.-W. Noh, W.L. Weber, Characteristics of a polluting technology: Theory and practice, Journal of Econometrics 126 (20...

Recent years have witnessed a rapid rise in the development of deterministic and nondeterministic models to estimate human impacts on the environment. An important failing of these models is the difficulty that most people have understanding the results generated by them, the implications to their way of life and also that of future generations. Within the field, the measurement of greenhouse g...