ABSTRACT
APART from a minor exception in Chapter X, our analysis of the firm’s market behavior has been static until now. We showed what the firm’s most profitable behavior is in a given situation; but we ignored all problems of change. In particular, we ignored the problem of transition from one market offer to another; and we ignored the problems raised by the impermanence of certain situations. These problems will have to be dealt with now. There are two reasons why this subject was not taken up in Part II. First of all, most of the problems to be dealt with here are peculiar to the price maker and are not raised at all by the price taker’s passive market behavior. Second, although some of the problems to be discussed here are faced by price makers and price takers alike, we postponed their discussion for the sake of simplicity. Since the typical firm in our society is a price maker, it seemed preferable to present the detailed and more realistic analysis of the firm as part of our discussion of the price maker’s behavior.
