Market makers are dealers who buy and sell a large volume of stocks to ensure trades take place in order to increase the liquidity of the entire exchange. This increased liquidity benefits all parties involved by improving trading efficiency.
A specialist is a market maker who works on specific exchanges, such as the New York Stock Exchange. Although their functions are similar, specialists focus more on facilitating trades between brokers directly on an exchange's floor. A specialist is a type of market maker who frequently trades specific stocks.