What does cross subsidization mean in economics?
In a cross-subsidization model, one business is dependent on another for revenue. For example, the cable TV company might require a certain number of customers to pay for service before it begins generating revenue. The cable TV company’s revenue is dependent on the number of customers it has, and those customers are dependent on the price of the service. Once the price of service is high enough, those customers are less likely to subscribe. So in this type of model, the cable TV company
What does it mean in economics?
The idea of cross-subsidization is that you can use one factor of production to pay for another one. In other words, one business can cover the costs of another business. This is done to make the business more efficient and keep it profitable. While it helps a business stay in business, it also needs to be done in a fair way.
What does cross subsidization mean in a sentence?
In a nutshell, a “cross subsidy” is a policy where one government entity receives money from another, but pays for it using money collected from a separate entity in a different area. In other words, the government subsidizes the first group by paying them less than the market value of the services they provide. The two groups are not “naturally” in competition with each other, because the government is providing a valuable service to one group that they would not otherwise receive if the
What does cross subsidize mean?
The term ‘cross subsidization’ refers to a situation where some activities in a business are less costly for the organization as a whole than the costs associated with those activities. A common example of cross subsidization is when an organization’s good or service is provided to its customers for less than a cost incurred for it to produce or distribute that good or service. This means that the economic activity is a drain on the firm’s total revenue, yet it is still provided to its
What does cross subsidization mean in economics terms?
A form of cross-subsidization occurs when one organization’s costs are passed off onto another organization in exchange for something of value. For example, the government provides roads for private businesses in exchange for a tax on the businesses’ revenue. A different example of cross-subsidization is when one company’s customers subsidize another company’s goods or services.
