Cross-subsidization
Cross-subsidization (or internal subsidization ) is called in the calculation of the subsidy one with operating loss operating company , branch of activity or product / service by another operating part or another company in the group using the latter achieved by profit . It is common in public companies and regulated monopoly operations .
Public companies
Public companies (e.g. municipal utilities ) that offer different product areas have the opportunity to use profits in individual product areas (e.g. electricity supply ) to lower prices in other product areas (e.g. local public transport ) . In this way, the customers of one product subsidize the users of the other.
Such a practice is justified z. B. with ensuring socially acceptable prices for certain services.
An example: the municipal power station of a city and the local public transport company are organized as subsidiaries of a joint municipal holding company. The power station generates surpluses that are used to compensate for the operating losses of the local transport company.
Cross-subsidies are often criticized in economics because they can help to maintain inefficient structures. Furthermore, the practice of cross-subsidization prevents transparency . On the other hand, a comprehensive range of services (without spatial price differentiation) can be financed through cross-subsidization. So wore z. In the postal and telecommunications sector, for example, in times of state monopoly, the profits from the metropolitan areas help to offer services without surcharges even in unprofitable rural regions. Since the liberalization of these economic sectors, the former state monopolists have been exposed to high cost pressure from new competitors. These concentrate their business activities on the lucrative metropolitan areas . In order to survive in competition , the former monopolists are ending their cross-subsidization, with the result that in Germany, for example, Telekom fails to make the necessary investments to connect even small, rural towns to the DSL network or to connect more and more branches to the post office Country closes.
In many cases, public companies are also monopolists in their field. The following applies here accordingly.
In the area of water management, cross-subsidization is expressly prohibited by the Water Framework Directive . In the area of local public transport, the admissibility of cross-subsidization based on Regulation (EC) No. 1370/2007 is legally controversial.
Cross-subsidization of monopoly companies
Grid-bound infrastructure markets (e.g. energy, telecommunications, post, railways) have natural monopolies with regard to their transmission and supply networks. The prices for competitive network access must be based on costs.
In the context of cross-subsidization, the monopoly areas are allocated costs that actually arise in the competitive areas of the affiliated company . The competitive areas thus gain market advantages over their competitors at the expense of those who claim the more expensive services of the monopoly area in return for payment.
This is intended to deter competitors from using the services of the monopoly area (network access) for economic reasons, while the overall result from competitive and monopoly areas in the affiliated company remains unchanged (neutral).
Private companies
Cross-subsidies in private companies are not subsidies in the strict sense, because they are characterized by the use of public funds. Here, too, there is a cross-subsidy in some companies. On the one hand, it is necessary to finance the losses incurred in the initial phase of the product life cycle (e.g. through profits from other areas). But there are also products that, due to the competitive situation, cannot be offered at a cost-covering level, but are necessary for customer loyalty. For example, many credit institutions offer checking accounts free of charge. Since this does not cover costs , it serves to retain customers in order to sell them loans and investments . The income from these transactions then subsidizes the actually deficit "current account product". Advisory services such as investment advice or financial advice are also usually free of charge, so that they are cross-subsidized through the sale of banking products.
See also
Individual evidence
- ↑ Swiss Post closes rural branches due to cost pressure Access: November 25, 2008
- ↑ Telecom is too expensive to lay DSL lines, villagers lay the line themselves ( memento of the original from December 10, 2008 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. Accessed: November 25, 2008
- ↑ See Linke, Verkehr und Technik 2010, p. 429
- ↑ Bernd Hochberger, Financial Planning , 2003, p. 180
