Shadow prices diverge from marginal costs in markets with externalities

the verdict

SUPPORTED

the evidence backs this

Recorded sources

2 sources for · 0 against

Counts group repeated records of the same source within each side. They do not measure evidence strength or source independence.

Economic literature demonstrates that externalities introduce distortions causing shadow prices to diverge from marginal costs, necessitating targeted regulatory corrections like Pigovian taxes.

The analysis

Papers [0] and [1] directly discuss externalities, market inefficiencies, and the divergence between shadow prices and market/social costs. The remaining papers cover unrelated topics such as monetary policy, contract law, digital transformation, and mental health studies, and are thus tangential.

Evidence for · 2

PRODUCTION EXTERNALITIES AND LONG‐RUN EQUILIBRIA: BARGAINING AND PIGOVIAN TAXATION

Recorded source metadata

JONATHAN H. HAMILTON, EYTAN SHESHINSKI, STEVEN M. SLUTSKY. PRODUCTION EXTERNALITIES AND LONG‐RUN EQUILIBRIA: BARGAINING AND PIGOVIAN TAXATION. 1989. https://doi.org/10.1111/j.1465-7295.1989.tb02015.x

Analyzes production externalities and market inefficiencies, noting that decentralized bargaining and market failures require complex Pigovian taxes and charges, which reflects the divergence between private or shadow pricing signals and efficient marginal costs.

Source citation format

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More for · 1

Shadow prices of agrochemicals in the Chinese farming sector: A convex expectile regression approach.

Recorded source metadata

Jiajun Zhou, Philipp Mennig, De Zhou, Johannes Sauer. Shadow prices of agrochemicals in the Chinese farming sector: A convex expectile regression approach.. 2024. https://doi.org/10.1016/j.jenvman.2024.121518

Examines the disparities between shadow prices and market prices in the context of environmental externalities from agrochemicals, demonstrating measurable divergences.

Source citation format

The paper trail · every fact has a biography

first checked01 Aug 2026

judged → SUPPORTED · 8201 Aug 2026

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