We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Price Taker?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A price taker is a person or company with limited market power, who cannot affect prices on the open market with business activities because these activities are too small to register. Price takers must work with the available going rate; this in contrast with price makers, which are people and institutions with enough clout to impact the market with their financial decisions. In investment communities, movements of price makers are watched closely, as they can affect the value of stock and commodities.

A simple example of a price taker is an individual investor. People who place small orders for securities do not have an impact on their value because the orders are negligible in size. Likewise, companies selling commodities in a very crowded market have little control over their price, as hiking the price up will drive away customers. A T-shirt stand owner trying to sell T-shirts for a price much higher than that of neighboring stands is a price taker, as customers will skip by and purchase shirts at a lower price from other vendors, forcing that person to drop the price or go out of business.

Economists are very interested in the way markets work and the divisions between price makers and price takers. According to some theories, markets tend to push towards efficiency, with prices evening out over time in response to market pressures. These changes in pricing and availability are primarily predicated by the price makers, however, as a price taker cannot make a meaningful change in the market.

A disadvantage of being a price taker is that unfavorable market conditions must be tolerated, as there are no steps available for changing pricing or availability. On the other hand, the risk of loss is much smaller, as deals aren't being made in high volumes. Price makers take more risks with their funds but stand to gain much more as a result of their activities. They are also more closely scrutinized, as questions about wrongdoing become much more serious when huge trades are involved.

It is possible for an individual investor to become a price maker, although this is rare. People with a lot of money or clout in the investment community may be able to drive prices and availability up and down in the financial market with their activities. To move from being a price taker to being a price maker, it is generally necessary to be backed with substantial funds, as well as being generally respected by other investors as a reliable authority.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By anon358916 — On Dec 13, 2013

The real takers are businesses that refuse to pay the people who do all the real work a decent wage so that they will not have to get food stamps and buy their children's school clothes at second hand stores. All so they can buy a new BMW every other year and send their brats to Yale.

This is especially true in so-called right to work states. It's government sponsored employee abuse, where bosses have the legal right to lie to, steal from, cheat and otherwise stick it to their workers, treating them like cattle.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.