Optimal system design: Towards new interpretation of shadow prices in linear programming (Q1820693)

We start with the concept of an optimally designed product-mix system and formulate the corresponding duality theory. We show that although the system is degenerate, the optimality of design ''overcomes'' its own degeneracy and allows unique valuation of all resources. This valuation rests on the reinterpretation of the shadow prices in optimally designed systems: it requires separating the resource-valuation function of a dual variable from its resource-pricing function.