Price Taker

Price Taker

1. An investor whose buying or selling transactions are assumed to have no effect on the market.

2. A firm that can alter its rate of production and sales without significantly affecting the market price of its product.

Notes:

1. In the context of the stock market, individual investors are price takers.

2. Suppose you sell water, which of course is supplied by millions of other places, including the sky. If you decide to "set" the price of a gallon of your water at $10, you will likely sell nothing because this "commodity" is readily available elsewhere for a much cheaper price.

See also: Efficient Market Hypothesis, Herfindahl-Hirschman Index - HHI, Perfect Competition