However, the application of the shadow pricing
criterion will take effect starting with the fiscal year ending December 31, 2016.
It stated : "Critically, this will reduce revenue leakage based on the product's ability to do shadow pricing
on negotiated preferential pricing,"
There are some major issues involved in cost benefit analysis, of which the most important are valuation of costs and benefits, shadow pricing
, discounting, income distribution, the treatment of uncertainty and the measurement of externalities (e.
The team will tap into existing databases and ecological models and explore the use of economic methods such as shadow pricing
, contingent valuation and choice modelling.
It therefore follows that a financial firm that wants to maximise shareholder value cannot use the relatively straightforward capital pricing tools that are available to nonfinancial firms, and must seek an alternative shadow pricing
tool to determine whether an investment adds to or detracts from shareholder value.
3 For an intuitive discussion of shadow pricing
and project evaluation, see Tower (1991).
The concepts of social opportunity costs and of sub-optimal savings rates, for example, were central to the form of economic analysis based on shadow pricing
espoused by Little and Mirrlees in their 1968 OECD volume and by their followers.
The use of world market prices and alternative assumptions about the shadow pricing
of capital and labour enabled us to calculate three measures of the shadow rate of profit, corresponding to short-run, medium-run and long-run analysis.
Any topic of further interest could be selected for in-depth study from Chapters 3 through 10, where welfare weights, competitive equilibrium, allocative and cost efficiencies, shadow pricing
and a cost-benefit framework are discussed.
Durdag (1979) Shadow Pricing
and Macroeconomic Analysis: Some Illustration is from Pakistan.