Shadow Pricing

Shadow Pricing

The arbitrary assignment of dollar values to non-marketed goods.

Notes:

When performing different types of cost-benefit analyses, certain costs or benefits are intangible and, in order for full analysis of the scenario, all these variables must be assigned values.

For example, when performing a cost-benefit analysis on a mining operation, the lost intangible value associated with the scenic views must be priced and factored in as a cost.

See also: Alternative Asset, Intangible Asset, Tangible Asset