cross-subsidization

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cross-subsidization

see SUBSIDY.

cross-subsidization

the practice by firms of offering internal subsidies to certain products or departments within the firm financed from the profits generated by other products or departments. Cross-subsidization is often used by diversified and vertically integrated firms as a means of financing new product development; DIVERSIFICATION into new areas; or to facilitate price cuts to match intense competition in certain of its markets. See VERTICAL INTEGRATION, PRICE-SQUEEZE.
References in periodicals archive ?
State utilities usually charge a higher tariff from the Railways to cross-subsidize domestic consumers.
They would cross-subsidize the amount from the rest of the 90% construction for middle and high income groups.
Indeed, theoretically speaking, high roaming charges can help you cross-subsidize tariffs in some other more competitive segment," says Mahesh Uppal, a Delhi-based telecom consultant.
Medicaid rates have implications for residents' care, particularly in those facilities with high Medicaid concentrations where there is limited opportunity to cross-subsidize with funding from other payers--such as Medicare or private payments.
It tends to be unfair and regressive, forcing people who own fewer than average vehicles to cross-subsidize those who own more than average vehicles, and reducing housing affordability.
Instead, they constrain each automaker's "fleet average" fuel economy, forcing the automakers to cross-subsidize smaller vehicles with the profits on larger vehicles so that consumers can be persuaded to buy what the government tells the automakers they must sell.
An examination of the mean characteristics of homes that appear to cross-subsidize is contained in Table 4.
Any attempt to cross-subsidize the venture with license fee money will be unacceptable to the pubcaster's watchdogs.
To cross-subsidize with voice or other data services would be against regulations, some argue, but BT has pledged to be open about the economics of the service.
Radwanski's review found evidence that Canada Post, a so-called Crown corporation, was using the price of its stamps to cross-subsidize the junk mail business, and its courier service, which competes with such private-sector businesses as Purolator Courier Ltd.
In the former case, local governments are subsidizing operations from general revenues; in the latter, the municipal public utilities help cross-subsidize shortfalls from the profits of other utility departments such as gas, electric power, and water supply operations.
The ability to cross-subsidize is diminishing," Dickler points out.