Product-Cost Cross-Subsidization
Product-cost cross-subsidization means that if a company undercosts one of its products, it will overcost at least one of its other products. Similarly, if a company overcosts one of its products, it will undercost at least one of its other products. Product-cost cross-subsidization is very common wheh a cost is uniformly spread—meaning it is broadly averaged—across multiple products without recognizing the amount of resources each product consumes.