Cross subsidization

Cross subsidization is the practice of funding one product with the profits generated by a different product. This means that one group of customers is paying for the consumption of other customers. For example, Jeff, George, and Harry order meals that cost $20, $25, and $30, respectively, and are then charged $75 for the three meals on a single bill. If each one of them pays $25, then Jeff is cross subsidizing Harry for $5, since Jeff is paying $25 for a meal that cost $20, while Harry is paying $25 for a meal that cost $30.