University of National and World Economy

UNIVERSITY OF NATIONAL AND WORLD ECONOMY

COURSE TITLE: ‘International Prices and Pricing‘ SEMESTER: WINTER

TEACHER’S NAME: Assistant Professor Vasil Petkov, PhD OFFICE: UNWE, room 3030 E-MAIL: [email protected]

1. ANNOTATION The scope of the discipline ‘International Prices and Pricing‘ includes theoretical, practical, and methodical part. The structure of the content means that teaching is aimed at transformation the theoretical performances in the concept fields of application and specific methods of price analysis, forecasts, and decisions. The theoretical part of the course identifies the main characteristics and features of market pricing and features of international markets. Multidimensional characteristics of the market is a methodological basis for understanding the system of relations and dependencies, which can be found in each market price. The definition of the main categories of market pricing clarifies the notion apparatus and analytical language with which the subject handles. The applied part of the content of the course is concentrated on detailed characteristics of the types of prices and price information in terms of their representation to determine the actual price levels and trends on external markets. Price ratios and their different types are important to clarify the relationship between prices and the proportions of exchange in international trade. Price-formation factors are considered in their variety and impact on the formation and movement of international prices. This reveals the complex nature of price formation, in which market and non-market forces interact. Methodical issues in the content of the course is aimed at detecting the regularities and features of formation and movement of prices on specific international commodity markets. Subject to review in this section are still methods of price comparisons, disaggregation or composition of prices in foreign contract pricing, use of price protection clauses. Seminars are aimed at achieving knowledge and practical skills.

2. LANGUAGE OF TEACHING ENGLISH

3. COURSE CONTENT (TOPICS) Reproduction characteristics of the market and market nature of prices. Main categories of market pricing. Price terms of different types of market structures (level and dynamics of prices, the ‘price-cost‘ relations).

Common featuters and peculiarities between market, company, and contract price. Characteristics of international and foreign trade prices. Criteria for selection of a representative international price on a specific market.

Permanent, cyclical, and short-term changes in prices on international markets. The task of the scientific analysis of the price-cost influence of the main pricing factors.

Basic regularities of formation and change of prices on international markets in the period 1990-2013.

Types of price information for international markets: classification, economic characteristics, and applications.

Characteristics of price ratios as an analytical tool. Absolute and relative prices. Types of price ratios and their economic characteristics. Relationships and dependencies between the prices of domestic and external markets, factors that separate or ‘degrade‘ the internal market in price terms.

UNIVERSITY OF NATIONAL AND WORLD ECONOMY

Price ratios on the international markets: determining the relative prices on the basis of ‘Net Barter Terms of Trade‘ and cross-sectoral price proportions (Commodity Terms of Trade). Analyzing the results; price comparisons between countries (comparative price levels) based on purchasing power parity (PPP).

Features of the formation and dynamics of prices on international markets of industrial and agricultural resources. Main types of published price information and representative price lines (examples of specific commodity markets).

Characteristics and peculiarities of the pricing on international organized markets (broker‘s market, auction, and tender pricing).

Methodological features in determining the foreign trade prices of machinery and equipment. Types of contract price adjustments in the production of machines. Clause of a sliding price. Determining the economic value to the customer. Types of contract prices according to INCOTERMS-2010.

The chain of pricing and the use of ‘progressive‘ and ‘regressive‘ technique for determining the prices of exports and imports.

Empirical study of the impact of the economic cycle on the international prices of steel, energy, machinery and equipment.

Empirical evidence of the exchange rate impact on the prices of domestic and external markets of major exporting and importing countries.

Seasonal fluctuations of the foreign trade prices of major exporters and importers of agricultural products and industrial resources.

Basic features of industry, contract, and company pricing.

Development of general scheme for technical and economic comparisons of competitive products and parametric prices (examples of specific articles of the general machinery).

4. METHODS OF TEACHING The teaching is done through a combination of lectures, seminars, and discussions with the development of practical tasks on set methodology. In order to illustrate the teaching are used slides, print and online sources of information.

5. LEARNING OUTCOMES In the process of teaching of the course ‘International Prices and Pricing‘ students receive a system of scientific and practical knowledge in market and international pricing, namely:  basic regularities of formation and change of prices on international markets;  sectoral characteristics of market pricing and functioning of the competitive mechanism of the market;  factors that separate or ‘degrade‘ the national market in price terms;  criteria for selection of a representative international price for a specific market and economic characteristics of the types of price information;  international price comparisons and competitive pricing tables in the external trade pricing;  differentiation and plurality of prices in international trade;  absolute and relative prices, price ratios and price lines, and their analytical capabilities.

UNIVERSITY OF NATIONAL AND WORLD ECONOMY Skills, which are acquired as a result of training, are important for the building of vocational students. These skills are primarily applied to practical nature:

 use of different channels and sources of information to collect data for international prices;  selection of price information on the criteria for assessing its representativeness;  distinguishing the accuracy of price information according to the stage of pricing from which it comes;  recognizing the specificity of the impact of various pricing factors on prices;  understanding the dynamics of prices on a specific international market with the factors that determine them;  rationalization of the links in the system of market prices through price ratios.

6. ASSESTMENT METHODS Throughout the course the students are assigned with practical tasks, homeworks, work with statistical publications and preparation for the seminars and current test. The degree of students’ knowledge of the discipline ‘International Prices and Pricing‘ is determined on the basis of a complex final mark. The final mark is formed from the current mark from the semester and the mark from the final test exam. The final mark is formed as follows:  presence on the seminars and participation;  current tests through the semester;  practical tasks (up to 12 pages);  results from the test exam.

7. REFERENCES (MANDATORY AND RECOMMENDED) REFERENCES А. MANDATORY Nagle, T., J. Hogan, J. Zale, 2011, ‘The Strategy and Tactics of Pricing: A Guide to Growing More Profitably‘, Prentice Hall; Rickards, J., 2011, ‘Currency Wars: The Making of the Next Global Crisis‘, Penguin Group; Smith, T. J., 2011, ‘Pricing Strategy: Setting Price Levels, Managing Price Discounts and Establishing Price Structures‘, South-Western College Pub; Bertini, M., J. T. Gourville, ‘Rethinking the Way Prices Are Set Can Expand the Pie for Everyone‘, Harvard Business Review, June, 2012; Cardarelli, R., S. Elekdag, S. Lall, ‘Financial Stress, Downturns, and Recoveries‘, IMF WP/09/100; Cuddington, J. T., D. Jerrett, ‘Super Cycles in Real Metals Prices?‘, IMF Staff Papers, Vol. 55, No. 4, 2008; Erten, B., J. A. Ocampo, ‘Super-cycles of commodity prices since the mid-nineteenth century‘, DESA Working Paper No. 110, February, 2012; Hilbers, P., A. W. Hoffmaister, A. Banerji, H. Shi, ‘House Price Development in Europe: A Comparison‘, IMF WP/08/211; Silver, M., ‘An Index Number Formula Problem: The Aggregation of Broadly Comparable Items‘, IMF WP/09/19; Spatafora, N., I. Tytell, ‘Commodity Terms of Trade: The History of Booms and Busts‘, IMF WP/09/205.

UNIVERSITY OF NATIONAL AND WORLD ECONOMY B. RECOMMENDED Eurostat Statistical Books, 2008, ‘European Price Statistics: An Overview‘; Financial Times Special Report, ‘Commodities: Deflating markets‘, July 17-th, 2012; Huchet-Bourdon, M., 2011, ‘Agricultural Commodity Price Volatility: An Overview‘, OECD Food, Agriculture and Fisheries Working Papers, No. 52, OECD Publishing; Roache, S. K., ‘Commodities and the Market Price of Risk‘, IMF, WP /2008/ 221; The Economist, ‘Buttonwood: Gilt-edged argument‘, April 28-th, 2011; The Economist, ‘Comparative Advantage: The Boomerang Effect‘, April 21-st, 2012; The Economist, ‘Return of the Mac‘, June 8-th, 2012. C. STATISTICAL ISSUES OF INTERNATIONAL ECONOMIC ORGANISATIONS FAO, Production Yearbook; FAO, Trade Yearbook; IMF, International Financial Statistics, monthly; IMF, International Financial Statistics Yearbook; OECD, Main Economic Indicators (monthly); OECD, Trade by Commodities (annual); UN, Commodity Trade Statistics; UN, Energy Statistics Yearbook; UN, Handbook of World Mineral Trade Statistics; UN, Industrial Commodity Statistics Yearbook; UN, Monthly Bulletin of Statistics; UNCTAD, Commodity Yearbook; UNCTAD, Monthly Commodity Price Bulletin; Commodity Price Bulletin Up-date.