> So what makes up the remaining 40%? Under the Bundesförderung für effiziente Gebäude, households receive 30 to 70% of eligible costs. If an installer raises a €25,000 quote to €30,000 and the household receives a 50% subsidy rate, the household’s net cost rises by €2,500 while the installer receives €5,000. This means the pressure to negotiate a better deal is halved because of the way the policy is designed.
I’m sure that well designed kickback scheme is hiding somewhere here.
Rather, my thought is that such a subsidy encourages sellers to raise the price of the unit while including something else along with the unit. Suppose they raise the price by that €5,000 and include somewhere €3,000 of something else in the deal.
Installer pockets €2,000, customer pockets €500, government pays.
This can be emergent behavior, not necessarily designed.
We see this with Medicaid (healthcare for poor people) here in the US. Each state runs it's own program, but the federal government pays a large *percentage* of the cost. Enter drug companies offering the state big rebates to cover their brand name drug, states reacting by putting the brand name on the approved list and excluding the generic version. The total bill is a lot higher but the state gets back enough that it saves them money. This certainly wasn't intended in the design, but there's enough money in it that it hasn't been fixed.
> So what makes up the remaining 40%? Under the Bundesförderung für effiziente Gebäude, households receive 30 to 70% of eligible costs. If an installer raises a €25,000 quote to €30,000 and the household receives a 50% subsidy rate, the household’s net cost rises by €2,500 while the installer receives €5,000. This means the pressure to negotiate a better deal is halved because of the way the policy is designed.
I’m sure that well designed kickback scheme is hiding somewhere here.
I'm not sure about "well designed".
Rather, my thought is that such a subsidy encourages sellers to raise the price of the unit while including something else along with the unit. Suppose they raise the price by that €5,000 and include somewhere €3,000 of something else in the deal.
Installer pockets €2,000, customer pockets €500, government pays.
This can be emergent behavior, not necessarily designed.
We see this with Medicaid (healthcare for poor people) here in the US. Each state runs it's own program, but the federal government pays a large *percentage* of the cost. Enter drug companies offering the state big rebates to cover their brand name drug, states reacting by putting the brand name on the approved list and excluding the generic version. The total bill is a lot higher but the state gets back enough that it saves them money. This certainly wasn't intended in the design, but there's enough money in it that it hasn't been fixed.
> not sure about "well designed"
I'm not sure cause I'm not an English native speaker and on the Aspergers spectrum, but I think this is sarcasm.
Greed.
It's the same for movie prices in Germany. 12-21€ per movie isn't the norm. Go to France and you get the same movies on screen for a fraction.
The Kartellamt (cartel office) is simply a toothless paper tiger.