• Journal of the Korean Operations Research and Management Science Society
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• v.10 no.1
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• pp.31-40
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• 1985

When an economy has institutional price constraints the relationship between market prices and shadow prices is not yet fully investigated. A pure consumption economy is considered where market prices guide the consumption behavior and shadow prices measure the social value of resources. In this case we show that if the utility function is additively separable there exists a complementarity relation between the difference of the market price and the shadow price and the difference of the market price and the regulated upper (or lower) bound.

• Journal of the Korean Operations Research and Management Science Society
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• v.18 no.2
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• pp.147-156
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• 1993

Recently a new concept of shadow prices, called average shadow price, has been developed. This paper provides a dual problem and the corresponding duality theorems justifying this new shadow price. The general duality framework is used. As an important secondary result, a new reduced class of price function, the pp. h.-class, has been developed for the general duality theory. This should be distinguished from other known reductions achieved in some specific areas of mathematical programming, in that it sustains the strong duality property in all the mathematical programs. The new general dual problem suggested with this pp. h.-class provides, as an optimal solution, the average shadow prices.

• Journal of the Economic Geographical Society of Korea
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• v.13 no.3
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• pp.398-415
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• 2010

The purpose of this paper is to grasp levels of cost burden in pollution treatment by measuring efficiencies and shadow prices by pollutants in Korean cities. The efficiencies and shadow prices of pollutants will be compared for cities divided by Seoul metropolitan area and non-Seoul metropolitan area. Annual shadow prices of NOx, SOx, and PM10 emissions in the cities of Seoul metropolitan area are 0.846, 0.318, 0.816, respectively for 1999-2005. The annual shadow prices in the cities of Non-Seoul metropolitan area are 0.848, 0.272, and 0.789, respectively over the same periods. The shadow prices of SOx showed similar levels between two areas but those of NOx and PM10 of cities in Seoul metropolitan area were higher. NOx emission quantities of both areas have similar increasing patterns because the NOx has mainly increased with augmentation of transportation regardless of Seoul metropolitan and non-Seoul metropolitan areas. It seems that the reason the shadow prices of two pollutants for the cities of Seoul metropolitan area are higher, is because environmental regulation is stronger in the cities of Seoul metropolitan area, the cities of Seoul metropolitan relatively show higher quantities of pollution reduction under given desirable outputs, and generally have industrial sectors with small pollution emission. In the future we need to reduce pollutants in the various respects such as adjustment of overall industry structure, energy consumption pattern, and reviews of arrangement of living space for the cities located on the downward-sloping segment of production frontier.

• KIEE International Transactions on Power Engineering
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• v.11A no.4
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• pp.21-26
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• 2001

As competition is introduced in the electricity supply industry, congestion becomes a more important issue. Congestion in a transmission network occurs due to an operating condition that causes limit violations on the transmission capacities. Congestion leads to inefficient use of the system, or causes additional costs (Congestion cost). One way to reduce this inefficiency or congestion cost is to control the transmission flow through the installation of UPFC (Unified Power Flow Controller). This paper also deals with an optimal siting of the UPFC for reducing congestion cost by using shadow prices. A performance index for an optimal siting is defined as a combination of line flow sensitivities and shadow prices. The proposed algorithm is applied to the sample system with a condition, which is concerning the quadratic cost functions. Test results show that the siting of the UPFC is optimal to minimize the congestion cost by the proposed algorithm.

• The Transactions of the Korean Institute of Electrical Engineers A
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• v.55 no.8
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• pp.341-350
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• 2006

This paper presents a new methodology to draw the components of locational marginal price (LMP) in electricity market. Recently, the changing environments surrounding electricity industries resulted in the unbundled services provided by electricity market players, which may require the new pricing mechanisms based on the LMP. The changed pricing mechanisms will provide the price signals of time and location to the market participants. Most of the existing studies of LMP are based on the Lagrangian multipliers as shadow prices to evaluate the equivalent values of constraints or factors for security, reliability and quality. However, the shadow prices cannot provide enough information for components of LMP. In this paper, therefore, we proposed a new approach that LMP is divided into three components. To do this, we first present the method for shadow prices calculation and then break down LMP into a variety of parts corresponding to the concerned factors. The proposed approach is applied to 5-bus and modified IEEE 14-bus sample system in order to verify its validity.

• Journal of the Korean Operations Research and Management Science Society
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• v.24 no.2
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• pp.109-119
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• 1999

The average shadow price is a substitute for the traditional marginal shadow price. It can serve as a standard for decision making problems about the economic resources where the marginal analysis gives no useful information. This paper treats the average shadow price in pure integer programming and shows some stability properties of it. This implies that the values of the average shadow prices once computed are reliable within some extent of the data perturbations of the integer programming model.

• Environmental and Resource Economics Review
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• v.13 no.1
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• pp.33-47
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• 2004

Even though the price of extracted but unprocessed coal has been available in Korea, the use of it as scarcity index would be inappropriate because of price subsidy. Following Halvorsen and Smith(1984), Kim and Lee(2002) derived estimates of the shadow price of unextracted coal by estimating the restricted cost function and differentiating with respect to the quantity of coal extracted. In Korea, however, due to the limited data the capital prices have been computed inconsistently case by case without relying on the robust formula like the Christensen-Jorgenson methodology used in US, which could result in biased estimators of the restricted cost function. In the paper the shadow prices of the resources in situ are obtained by measuring an input distance function defined by Shephard (1970), which requires only the data on the quantities of inputs and output. Empirical results for the Korean coal mining industry show that these shadow prices as a coal scarcity have increased fast by approximately three times in comparisons with those obtained by Kim and Lee.

• Environmental and Resource Economics Review
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• v.18 no.2
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• pp.241-277
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• 2009

The purpose of this paper is to compare technical efficiencies and productivities without and with environmental constraints, and shadow prices of $SO_x$ in Korean and Chinese industries. The technical efficiencies without and with environment in Chinese manufacturing industries are higher than those in Korean manufacturing industries for 2000-2004. Most of individual Chinese manufacturing dominate those of Korean manufacturing in levels of technical efficiency. In terms of productivity changes excluding environmental constraints, the rates of annual growth in Korean and Chinese industries show 1.13 percent and 2.73 percent respectively. But Korean industry in productivity changes considering $SO_x$ reduction shows 2.41 percent, higher rate of growth than 1.58 percent of Chinese industry. In the shadow prices of $SO_x$, the reduction of an additional unit of $SO_x$ in the Korean manufacturing needs a decrease of 1.473 unit of output, while the shadow price of $SO_x$ in Chinese manufacturing is 0.0049, close to zero. Korean manufacturing should be specialized in higher sectors of technical efficiency and productivity and be also kept efficient in pollution abatement cost.

• Journal of the Korean Institute of Illuminating and Electrical Installation Engineers
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• v.19 no.5
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• pp.30-38
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• 2005

This paper proposes a new method which can calculates nodal price as an economic signal at non-optimal operation. By using pseudo constraints in 11 cases, we calculate shadow price and nodal price based on non-optimal operation. By comparing shadow price and nodal prices based on optimal and non-optimal operation effectiveness of the method is verified.

• Korean Journal of Agricultural Science
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• v.32 no.2
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• pp.127-150
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• 2005

Under the WTO system, the farm size expansion or the existing korean agricultural structure should be improved to cope with farm income decrease and to continue rice cultivation for food security in the future. This study is aimed at identifying optimum farm size under trade liberalization and import and export parity price system of inputs and outputs. The optimum farm size expressed the minimum point of long run average cost is determined as 15.1ha. The farm size to be equalized as urban laborer's income of 37,361 thousand won per year was revealed 30ha. Therefore the G't recommended farm size of 6ha should be changed to 30ha and the concerned policies for agricultural structure improvement also should be changed to more flexibilitiy.