What is cross subsidies in economics?
What is cross subsidies in economics?
Cross-subsidies, where one group of consumers pays a higher amount so that the price paid by another group can be reduced, are common in many markets.
What are cross subsidies in insurance?
pooling of risk between customers based on specific characteristics such ah age and gender. eg, if all occupations pay same the premium, less risky occupation subsidise premium costs for more risky occupation.
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.
What do you know about subsidy?
Definition: Subsidy is a transfer of money from the government to an entity. It leads to a fall in the price of the subsidised product. Description: The objective of subsidy is to bolster the welfare of the society. It is a part of non-plan expenditure of the government.
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 TOD tariff?
Time of Day (or TOD) tariff is a tariff structure in which different rates are applicable for use of electricity at different time of the day. It means that cost of using 1 unit of electricity will be different in mornings, noon, evenings and nights.
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 …
What is subsidy example?
Definition: Subsidy is a transfer of money from the government to an entity. It leads to a fall in the price of the subsidised product. It is a part of non-plan expenditure of the government. Major subsidies in India are petroleum subsidy, fertiliser subsidy, food subsidy, interest subsidy, etc.
What is direct cross subsidies?
Cross subsidization is the practice of charging higher prices to one type of consumers to artificially lower prices for another group.
