In this paper,both the allocation method based on the Shapley value and Pareto optimality theory are introduced. By means of the former,the penalty factor and the reward factor of hydropower pricing at different times are determined. And based on the latter,a novel differentiated hydropower pricing model is established to offer effective economic signals,for the purpose of minimizing the reduction ratio of economic benefits for small hydropower
plants to that in the line loss of power network,which can result in a low line loss and simultaneously ensure a weak effect of the pricing on the economic benefits for small hydropower plants and the power network. Case analyses show that the proposed model can bring about a win-win situation for small hydropower plants and the power network.