Final answer:
OTC market makers operate primarily to earn their own profit by buying and selling securities at their own risk, using mark-ups and mark-downs. They ensure liquidity and price stability in the market, thus facilitating a fair and orderly trading environment.
Step-by-step explanation:
OTC market makers primarily buy and sell for their own profit, at their own risk, and they do so by implementing a mark-up on the prices when they sell securities or a mark-down when they buy. In the OTC market, market makers contribute to market liquidity and efficiency by being ready to buy and sell securities even when there may not be immediate demand from buyers or supply from sellers.
Market makers ensure there is a degree of price stability and a consistent flow of securities available to traders. Their profit motive is to capitalize on the spread between the bid and the ask price. The existence of market makers helps to maintain fairness and order in the markets, in line with the principles of pure competition where buyers and sellers are well informed and can freely enter or exit the market.