Price Setters vs. Price Takers

Price setters can be greedy when establishing a price to sell their product at. This can result in paying more for a product then consumers woulod normally want to expect to pay. This can allow for another business to come in sell that same product for a fraction of the price to bring the overall price down. A consumer will not pay the higher price if they can simply go somewhere else and get that same product for less. When price setters establsih a low price some other businesses cannot match that low price which can cause financial problems.

Price takers know that fluctuation in prices will happen and they must prepare ahead of time to compensate for any change in price that could effect business. These sudden changes in price affect their total revenue. If less product is sold because their price is not correct they must adapt to the going price at the moment and accept financial losses in hopes that it will pick back up. Determining whether or not it will be a long term loss or a short term loss will be important.

Whether or not its better to be one or the other it seems that businesses are switch hitters in which they must be both a setter and a taker. If they have certain knowledge about specific information that will give them the edge to be the Price Setter, if they want to possibly stay off the radar and build they can take the price set by competition. It almost seems the cons and pros are about equal?