Mathematical Underpinnings

Rolf Färe, Shawna Grosskopf and Dimitris Margaritis

Chapter 4 in Pricing Non-marketed Goods using Distance Functions, 2019, pp 25-29 from World Scientific Publishing Co. Pte. Ltd.

Abstract: One of our goals in this chapter is to provide an intuitive introduction to our method for pricing non-marketed commodities or commodity characteristics. We consider our approach to be a complement to existing methods such as hedonic regressions or contingent valuation. Our main tool is calculus. And the key to finding prices (in price space) for non-marketed goods (which are in quantity space) is the derivative. A derivative is the perfect tool for taking a variable from one linear space — like our quantities — into its dual space, which are the shadow prices we seek…

Keywords: Shadow Prices; Distance Functions; Network Pricing; Duality Theory; Production Models (search for similar items in EconPapers)
Date: 2019
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