Why Do You Suppose That "Reaction Functions" Are Not Used

question 18

Essay

Why do you suppose that "reaction functions" are not used in analyzing the market structure of perfect competition (or even monopolistic competition)? If you were to draw reaction functions for any home firm and any foreign firm engaged in perfect competition, what would the functions look like?

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Definitions:

Whim

An impulsive or capricious notion or action, based on sudden desires rather than careful thought.

Negative Freedom

The concept of freedom defined as the absence of coercion or constraint on an individual's actions from external sources.

Government Agencies

Entities established by a government to carry out specific functions or services according to legal mandates.

Rational Freedom

The ability to make choices based on reason rather than coercion or instinct.