Are firms price takers?

In most competitive markets, firms are price takers. If firms charge higher than prevailing market prices for their products, consumers will simply purchase from a different lower-cost seller to the extent that these firms all sell identical, substitutable goods or services.

Who is a price taker?

A price taker is an individual or company that must accept prevailing prices in a market, lacking the market share to influence market price on its own. Due to market competition, most producers are also price takers. Unlike price takers, price makers are those with enough market and pricing power to dictate prices.

What is the difference between price takers and price makers?

Price takers must accept the prevailing market price and sell each unit at the same market price. Price takers are found in perfectly competitive markets. Price makers are able to influence the market price and enjoy pricing power. Price makers are found in imperfectly competitive markets such as a monopoly or oligopoly market.