crosssubsidiëring

Crosssubsidiëring, or cross-subsidization, is the practice whereby profits, revenues, or cost offsets from one product, service, or market are used to subsidize another within the same organization. The goal is often to support pricing, investment, or strategic objectives that would be difficult to achieve with a single, isolated product line.

The mechanism is usually internal. It relies on transfer pricing, internal charging, or implicit subsidies that move funds from higher-margin activities to lower-margin ones or to cross-subsidize non-market objectives. Cross-subsidization can occur within a corporate group, between divisions or subsidiaries, or across geographic regions and customer groups.

Common contexts include regulated industries, such as telecoms, energy, or transportation, where profitable services subsidize universal access or lower-priced offerings; airlines or hospitality sectors where premium products fund discount or loyalty programs; and healthcare or public services where profitable operations support subsidized services.

Critics argue that cross-subsidization can distort competition, obscure true costs, and reduce pricing transparency. If subsidies affect market outcomes, they may attract regulatory scrutiny or violate competition or state-aid rules. Proponents contend that carefully designed cross-subsidies can enable access to essential services, fund public or social objectives, or support innovation when transparent, objective cost allocation and governance are in place.

Best practice calls for clear accounting, transparent allocation methods, independent oversight, and compliance with applicable laws and regulatory standards to balance efficiency with fairness.