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Basing Point Methods of Price Quoting

1938; Wiley; Volume: 4; Issue: 4 Linguagem: Inglês

10.2307/136613

1920-7220

J. M. Clark,

Game Theory and Applications

Basing point methods of price quoting represent one form of imperfect competition in a group of industries, the underlying characteristics of which make some form of imperfect competition inevitable. They are departures from “normal” competition, by our simple inherited theoretical standard. But those who have had contact with the N.R.A. experiment in the United States must have had reason to doubt whether any industry is “normal” by such standards. Possibly the trouble was with what we had conceived as normal. In any case, this form of pricing deserves study uncontrolled by inherited preconceptions. It appears to arise in industries having four main characteristics or predisposing conditions. The first is a standardized commodity, such that purchasers will not buy from one producer if another producer offers even a very slightly lower price. This is true of the main product of the cement industry, and approximately true of basic tonnage steel products, but less so of the higher grades of steel. In the second place, production is localized, with a considerable number of producing points at considerable distances from one another. Some centres of production include a number of rival producers, others only one.