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A reactor is composed of a coil of wire. A transformer is at least two coils, wrapped around a core. The core provides a path for the magnetic flux, which results in strong magnetic coupling between the coils. This allows a voltage applied to one coil to be induced in the second coil.

With this in mind, some differences are:

-Function - a reactor can be used in filters, to control system voltage (pull extra VARs off the bulk electric grid), and to isolate circuits from a noisy ground, among other things. A transformer can be used to step voltage or current up or down, and to isolate circuits from eachother, among other uses.

-Size - Reactors are inherently smaller than Transformers. You likely have some reactors in your computer monitor that look very much like resistors. Transformers are much more obvious. Utility size reactors can be as big as utility transformers, though.

-Terminations - A reactor is a two - terminal device. A transformer will have at least three, and likely many more terminals.

-Cost - Reactors are cheaper - last time I purchased for a small signal design project I spent as little as 20 cents (US) per reactor. The last small transformer I purchased was $6.00. When you start getting into larger sized equipment, the difference becomes less extreme.

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