Chicago, Athens, and Jerusalem

Earlier this month, economist Steven Horwitz and his wife went shopping for new cell phones. Here is an amusing (to me, at least) anecdote taken from Horwitz’s blog post about the cell-phone-buying experience:

We were talking with the salesman (from whom we have bought every cellphone we’ve ever owned) about the pricing of Blackberrys and he pointed out that Jody’s Storm was half the price of my Tour, even though the Storm is the fancier model with a touch screen and the whole iPhone feel to it.  He said “it might seem strange that the newer, fancier phone is cheaper” but before he could say anything, I quickly said “well I’m sure the Tour is in demand from business users who don’t want to learn the touch screen and want the latest of the more ‘traditional’ BB, while the Storm is for people like Jody who might get an iPhone or Droid instead.”  He said “yup.”

I quickly replied:  “it’s just like staying over a Saturday night for plane tickets – segmenting your market by price elasticity.”  He gave me that sad, shake of the head that economists often get from people when we go geek.