What does cross subsidy meaning?

Cross subsidization is the practice of funding one product with the profits generated by a different product. This means that one group of customers is paying for the consumption of other customers.

What is cross subsidy in power sector?

The National Tariff Policy 2016 puts limits on cross subsidies at 20\% of the average cost of power supply. While the cost of power supply at the national level is around `6 per unit, average tariffs for commercial and industrial users are higher by 52\% and 23\%, respectively.

What is a cross subsidy business model?

One way to address this market is with enterprises that employ “cross-subsidy” business models, defined broadly as business models in which support for one product or service comes from revenues generated from another product or service. Offer entirely different products and rely on one product to subsidize the other.

What is the difference between subsidization and cross subsidization?

The cost of supplying electricity to all categories of consumers is same. Cross-subsidies involve a group of consumers paying more than the general cost of supply and the surplus is used to subsidize the provision to the other group at a price that is lower than the cost of supply to the subsidised group.

What is product cost subsidization?

Product-cost cross-subsidization is the strategy of pricing a product above its market value to subsidize the loss of pricing a different product below its market value. For instance, if you have a sporting goods business, and you’re hoping to increase the sale of baseballs, you might price these below your own cost.

What is cross subsidy Upsc?

Cross subsidization is defined as the variation in the price policy for 2 sets of buyers or it can be stated as When a marketer charges higher prices to a group of consumers in order to subsidise lower prices for another group, it is referred to as cross-subsidisation. This is a relevant topic for IAS exam aspirants.

How is cross subsidy surcharge calculated?

“Surcharge formula: S= T – [C/ (1-L/100) + D+ R] Where, S is the surcharge T is the tariff payable by the relevant category of consumers, including reflecting the Renewable Purchase Obligation C is the per unit weighted average cost of power purchase by the Licensee, including meeting the Renewable Purchase Obligation …

How is cross-subsidy surcharge calculated?

What is cross-subsidy Upsc?

What is peanut butter costing?

Peanut-butter costing involves assigning overhead costs using broad averages, rather than doing so in a more targeted manner. The name comes from how peanut butter is spread – uniformly over an entire piece of bread.

What is cross subsidy surcharge in Open Access?

b) Cross Subsidy Surcharge: Cross-subsidy surcharge shall be payable by all intra- State open access consumers except those persons who have established captive generating station and are availing open access for carrying the electricity to a destination for their own use.

How much does it cost to make a jar of peanut butter?

That means that 16.1 ounces of peanut butter cost $3.11 to make at home with these peanuts, which equals 19.3 cents per ounce of peanut butter.

What is crosscross subsidization?

Cross subsidization is the practice of charging higher prices to one type of consumers to artificially lower prices for another group.

Can a utility give cross-subsidy to a consumer?

However the utility can give subsidy to Y and such consumers since there are con… Cross subsidy is something like “Robbing Peter to pay Paul”! Take for example, if consumers of electricity beyond 300 KVH are charged 2x per KWH in order to charge only 0.5x for those consume below 100, it is a question of “cross subsidization”

Are cross-subsidies from high-income to low-income individuals justified?

Also cross-subsidies from high-income to low-income individuals can be justified if these are not implemented through the general tax-transfer system. However, MHI can also lead to cross-subsidies which are difficult to legitimate.

What is product cross-subsidization price shifting?

Cross-subsidization price shifting is the approach when some payers are charged more than full costs to make up for other payers that are paying less than full costs. Cross-subsidization can also be seen in healthcare and electricity departments. What is the benefit of product cost cross-subsidization?