Shadow Prices in Linear Programming Problems

C.M. Alaouze

Working Papers from New South Wales - School of Economics

Abstract: In linear programming problems the shadow price of a constraint is the difference between the optimised value of the objective function and the value of the ojective function, evaluated at the optional basis, when the right hand side (RHS) of a constraint is increased by one unit. It may be shown, using the approach of Winston (1995, pp250- 255, 293-300) that the shadow prices corresponding to the constraints of a primal LP problem are equal to the optimal values of teh dual variables.

Keywords: LINEAR MODELS; PRICES (search for similar items in EconPapers)
JEL-codes: C60 E30 (search for similar items in EconPapers)
Pages: 19 pages
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:fth:nesowa:96/18

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