A tale from Canada, courtesy of Professor Mike Munger.
Locals needed a stairway to cover a dangerous muddy slope. Toronto chose not to build the stairway because it would cost $65,000 (Canadian dollars). So a private entrepreneur created one for $550 – an obvious improvement over the mud slide.
The city’s response? Tear it down and construct a new $15,000 stairway.
The city’s actions, from start to finish, do not make sense unless you consider the incentives inherent in state government, which Munger nicely explains in his piece.