Is There a Method in Cell Phone Madness?

Confused by the complexity of cellular service plans? You’re not alone -- so are economists. The plans, in which a service provider’s best customers are punished with exorbitant per-minute charges for going over their limit, make little sense at first glance – until you realize that the point is to get customers to buy bigger plans than they need. Lots of interesting insights in this article, including this example: “When Apple and AT&T started offering the iPhone for $199, plus $30 a month for Internet access, sales shot up, even though the previous deal — $399 for the phone and $20 a month — cost less over a two-year contract.”