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Using Partial Differential Equations for Pricing of Goods and Services

Author

Listed:
  • Traykov Metodi

    (Faculty of Mathematics and Natural Sciences, South-West University “Neofit Rilski”, Bulgaria)

  • Trencheva Miglena

    (Faculty of Economics, South-West University “Neofit Rilski”, Bulgaria)

  • Mavrevski Radoslav
  • Stoilov Anton
  • Trenchev Ivan

    (Faculty of Engineering, South-West University “Neofit Rilski”, Bulgaria)

Abstract

This article is based on the methodology of comparative analysis, using an innovative approach for pricing of various goods and services. Benchmarking is the continuous search to find and adapt better pricing methods that leading to increased profits. We will consider the numerical solution of partial differential equations, based on Black-Scholes model for pricing of goods and services within European option. Also, we will present formulation and numerical behavior of explicit and implicit methods that can be use in pricing for company assets within European option.

Suggested Citation

  • Traykov Metodi & Trencheva Miglena & Mavrevski Radoslav & Stoilov Anton & Trenchev Ivan, 2016. "Using Partial Differential Equations for Pricing of Goods and Services," Scientific Annals of Economics and Business, Sciendo, vol. 63(2), pages 291-298, June.
    • Handle: RePEc:vrs:aicuec:v:63:y:2016:i:2:p:291-298:n:11
    DOI: 10.1515/saeb-2016-0122
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    References listed on IDEAS

    as
    1. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    2. Brennan, M J & Schwartz, Eduardo S, 1977. "Convertible Bonds: Valuation and Optimal Strategies for Call and Conversion," Journal of Finance, American Finance Association, vol. 32(5), pages 1699-1715, December.
    3. Phelim Boyle & Yisong Tian, 1998. "An explicit finite difference approach to the pricing of barrier options," Applied Mathematical Finance, Taylor & Francis Journals, vol. 5(1), pages 17-43.
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