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Allison Schrager

Finding Your Power in a Higher-Priced World

Consumers have a lot more control than the last time the economy was plagued by inflation. On-the-spot comparison shopping is just one way to play defense.

Consumers have more muscle than ever before to fight inflation.

Consumers have more muscle than ever before to fight inflation.

Photographer: Patrick Meinhardt/AFP via Getty Images

I am fairly compulsive about always having my keys with me. But after a series of mishaps, I got locked out of my apartment last week. It was after midnight so I had to call a 24-hour locksmith and he told me he'd be at my door in about half an hour. I spent those minutes panicking over how much it was going to cost. I felt so vulnerable; I needed this service. It was the only way I could get home. And given my desperation and late hour, he could charge almost any amount. After all, prices are set where supply meets demand. I had a very strong, or what we economists call inelastic, demand to get into my home, and there are a limited supply of 24-hour locksmiths. He had all the power.

Or did he? As I waited, I realized I did have some control. If he quoted an astronomical price, I could always decline, get a hotel room and find a lower-priced locksmith during normal business hours when I had more market power. I calculated what my walk-away price was, which was roughly  the cost of a hotel, the value I put on the convenience and comfort of getting into my home that night, and the cost of a daytime locksmith.  If the locksmith quoted me a higher price than that number, I’d walk.