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 program trading?14 Views
Finance a la shmoop what is program trading? okay well watch two episodes of
Big Bang Theory if you first watch one episode of Keeping Up with the [Man and woman watching TV]
Kardashians deal alright no different kind of program trading, program trades
in a Wall Street sense are run by a computer program, hence the catchy name
and it's also called the black box like a program kicks out that if the S&P 500
is down 0.3 percent in an hour and the US dollar has risen relative to the
pound and goog is outperforming the tech index and the moon is in the seventh
house and Jupiter is aligned with Mars then short a million shares of GE like
that would be something that the box would tell you or something like that
and there are a ton of weird mathy things behind the rationale for each of [Math formulas appear]
these trades some of it makes sense to normal people but most of it needs three
PhDs in math and physics and other stuff to translate rationally
well the dangerous thing here about program trades is that usually there is
no human involved when they execute a trade that is it's just computers
talking to other computers but thankfully computers never have glitches [Computer chip blowing off steam]
right they never have mistakes and things generally always run smoothly
when computers are involved right well this is a really smart way to manage
your retirement money just give it all to a black box and assume the guys who
wrote the algorithm knew what they were doing or maybe not [Hacker using a PC]
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