Why does the liklihood of free internet decrease as the hotel price increases?
My answer: The more expensive the hotel, the more likely it will have many business travelers. Those people are less price sensitive, especially for add-ons. The greater dispersion of valuations also increases the incentive to price discriminate and, in essence, charge them a higher rate. If Internet service is averaged into the basic price, Internet users receive an implicit discount. Why offer that discount to your business travelers? Steve Landsburg wrote a short piece on this for Slate.
Here is Dan’s original question.