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US cities pay too much for buses

(www.bloomberg.com)
355 points pavel_lishin | 1 comments | 26 Sep 25 13:57 UTC | HN request time: 0.2s | source
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RobKohr ◴[26 Sep 25 19:11 UTC] No.45389953[source]▶
"Federal funding typically covers 80% of bus purchases, with agencies responsible for the remainder."

Well, there is your answer. The one making the purchase isn't the one primarily paying for the purchase. This makes them less sensitive to pricing.

Kinda like how expensive healthcare is since it is paid for by insurance.

Or how you don't care how much you put on your plate or what you choose to eat at an all you can eat buffet.

The second you detach the consumer from the price of something, even through an intermediary such as health insurance, that is when they stop caring about how much something costs, and so the price jumps.

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Y_Y ◴[26 Sep 25 20:02 UTC] No.45390477[source]▶
And congratulations to any of today's lucky ten thousand who are just learning of the Principal-Agent Problem.

https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...

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phil21 ◴[26 Sep 25 20:59 UTC] No.45390962[source]▶
I'm convinced that a great majority of problems in the US these days fundamentally boils down to principal agent problems. The 2008 financial crisis is a great example. Once banks no longer kept mortgages on their own books, it just became a matter of time until that was going to blow up. The incentives change.
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simianwords ◴[27 Sep 25 08:08 UTC] No.45393992[source]▶
You are right but in a roundabout way. It’s true that most problems in US can be explained by this but it’s also true that the west and US particularly are successful because they can bypass the principal agent problem to an extent.

You just have to look at India or Africa a bit to understand the severity to which this problem permeates day to day in these countries.

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mellow_observer ◴[27 Sep 25 15:32 UTC] No.45396603[source]▶
That's an interesting line of thought. How would you say the US/west are able to bypass this problem more effectively?
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1. JumpCrisscross ◴[28 Sep 25 09:01 UTC] No.45402851[source]▶
“America’s sophistication is reflected in the depth of its financial markets. It is unusually good at creating tradeable claims on the profits and revenues that its economy generates. In a more primitive system, these spoils would mostly accrue to the state or tycoons; in America, they back a vast range of financial assets.”

http://www.economist.com/news/finance-and-economics/21598651...