Basing Point
In the basing point pricing system, a basing point is a specified geographic location from which the exact same delivered price applies to each and every destination. Different companies would establish the prices of their products within a specified market, setting a "base price" plus transportation costs, regardless of the delivery destination.
So like...let's say the basing point is in Kansas City. Okay, then any shipments within Kansas City will simply cost the base price, while shipments to other towns will be the base price plus the designated shipping rate anywhere within the delivery zone, regardless of the distance from Kansas City. A delivery address 100 miles away would be the same price as an address which is 60 miles away.
This allows companies to collude with each other to agree on a base price of an item. But it's not a violation of antitrust laws which outlawed industry price fixing. Basing point systems are pretty passe today, but they were all the rage for the 60 years following the Sherman Antitrust Act of 1890.
Related or Semi-related Video
Finance: What is the Arms Short Term Tra...13 Views
finance a la shmoop what is the Arms Short Term Trading Index not to be
confused with the short arms term trading index a run by this guy all [Man with dinosaur for a head sitting at a desk]
right Richard Arms invented it in the 70s and then a journalist cleverly
renamed it Trin.... short for trading index very clever
yeah well Trin as in Rin Tin is just an index for the advanced decline ratio in
the stock market and if you haven't seen our video on it oh well you should we've
had George Clooney of fortune so directed the computation of the Trin [George Clooney directing a show]
looks like this Trin equals advanced issues divided by declining issues all
over advanced volume divided by declining volume....
So note that this equation maps volume as an element of the computation so it's
meaningfully more useful than just the vanilla advanced decline ratio and hey [Man discussing equation]
just keeping it real their advanced decline ratio we love you but you're [Advanced decline ratio laying on sofa eating doughnuts]
just not as good all right well so if we compute things we get a value of 1 and
well that's good or rather a bullish sign that the market "wants to go
up" above one is bearish and at premiums of 30 40 50 percent ie [Bear walking by a river]
calculations of 0.5 very bullish to 1.5 very bearish well those are signs that
have been validated by actual market performance over time well why would we
care about this calculation in the first place, well if we get the answer right as [Man staring at a crystal ball]
to where the markets going well you know we can make a fortune
yeah ask Warren Buffett... [Warren eating dinner]
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