For example, in the energy sector, a utility company may charge higher rates to commercial and industrial customers in order to subsidize lower rates for residential customers. This may be done to ensure that basic energy services are affordable for all members of the community, regardless of their income level or ability to pay.

Cross-subsidies can also occur within a single product or service, such as when a company charges higher prices for premium features or customization in order to subsidize the cost of providing a basic service to all customers. The use of cross-subsidies can be controversial, as it may be seen as a form of price discrimination that benefits some groups at the expense of others.

See also: Price discrimination