Cross Subsidy - Definition

The inequitable Assignment of costs to cost objects, which leads to over costing or under costing them relative to the Amount of activities and Resources actually consumed. This may result in poor management decisions that are inconsistent with the economic goals of the organization. State trading enterprises with monopoly control over Marketing agricultural exports are sometimes alleged to cross subsidize, but lack of transparency in their operations makes it difficult if not impossible to determine if that is the case. For example, to permit it to price below cost for others. In international trade, this could be one explanation for dumping.

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