Actual and Shadow Prices in Linear Programming. ESRI Memorandum Series No. 74 1970

Geary, R.C. and Scott, S. (1970) Actual and Shadow Prices in Linear Programming. ESRI Memorandum Series No. 74 1970. [Policy Paper]

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Abstract

There is some confusion in the literature as to the meaning of shadow prices in linear programming. This note is an attempt at clarification. In general (except for here calling it the objective function instead of preference!) we follow Geary and McCarthy (1964), usually with indication of page but with a slight but obvious change in notation. We place ourselves at the start in the simplest conceivable situation economically and mathematically (the latter in postulating that in the Primal the problem is one of maximum the constraint vector b having all elements positive and all constraint potential inequalities, i. e. all with sign "<" and no "=", which is complicating.

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