When talk is free: The effects of pricing plans on consumer demand
Wednesday, February 6, 2013 - 12:01
in Mathematics & Economics
From banks to telecom providers, various industries are moving to pricing plans that offer a certain amount of "free" service. Bank customers are allowed a certain number of free ATM withdrawals each month, and cell phone users receive free minutes. These three-part plans—which also include a regular (usually monthly) access fee as well as a usage fee if the customer exceeds the free allotment—are replacing older two-part plans that charged an access fee and a usage price for every unit of consumption.