Home > Term: shadow price
shadow price
The true economic price of an activity: the opportunity cost. Shadow prices can be calculated for those goods and services that do not have a market price, perhaps because they are set by government. Shadow pricing is often used in cost-benefit analysis, where the whole purpose of the analysis is to capture all the variables involved in a decision, not merely those for which market prices exist.
- Part of Speech: noun
- Industry/Domain: Economy
- Category: Economics
- Company: The Economist
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- summer.l
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