cross-subsidization

(redirected from cross-subsidize)

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.