[rayiner]

It’s not about making a profit versus not—these prizes would almost certainly not be profitable for example. But you have to set high enough prizes to create the right level of incentive. Likewise, your (prices + subsidy) for transit or water/sewage must be high enough support an efficient level of infrastructure spending. With transit, the government underpriced and undersubsidizes. With water/sewage, the government under prices and doesn’t subsidize at all.

The government underprices for the same reason it underfunds pensions and over promises pension benefits. It’s a way of pushing costs into future generations while buying votes in the short term.