shadow price

Definitions

Accounting

Economics

  • noun the price given to a good or service which has no market price. The value of air quality or pollution may have to be calculated as part of the environmental costs of making a product, even though there is no market price for them.

Health Economics

  • (written as Shadow Price)
    The marginal opportunity cost of using a resource as estimated in a situation where there is no market price or the market price is believed to reveal opportunity cost sufficiently imperfectly to warrant the exercise. It may also be the marginal valuation of a service as revealed by methods such as conjoint analysis. Often used in cost-effectiveness and cost-utility analyses.
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