- There is a search cost of finding someone to trade with. Market makers streamline the process by always having a deal available. They might not offer you the best price you could get if you waited, but if you want to buy/sell a commodity right now you now have the option to do so, and probably removing the search costs from society as a whole is economically efficient.
- Special case of the above: They allow people who have want to trade huge amounts of a commodity a way to efficiently do so (no need to talk with multiple people; can do the trade all in one place).
- By making trading more efficient, society can get a better idea of the "true" price of things. Extremely important because prices guide investment. For example, if you're a farmer, and you're thinking about what crops to plant or a research lab thinking about where to focus your research. Having an efficient market with accurate prices ensures the economy grows at max speed.
- Special case of the above: They allow people who have want to trade huge amounts of a commodity a way to efficiently do so (no need to talk with multiple people; can do the trade all in one place).
- By making trading more efficient, society can get a better idea of the "true" price of things. Extremely important because prices guide investment. For example, if you're a farmer, and you're thinking about what crops to plant or a research lab thinking about where to focus your research. Having an efficient market with accurate prices ensures the economy grows at max speed.