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taw comments on If it looks like utility maximizer and quacks like utility maximizer... - Less Wrong
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I meant I'm predicting that modeling monopolies/oligopolies as entities that try to optimize their profit is going to be unsuccessful.
I predict they will be very successful at creating barriers to entry (oligopolies that do that better stay in game longer), and they will be bad at responding to market changes in a way traditional economics claims they would (difference in profits matters very little to their survivability, profits that are too high might even encourage entry of competitors what would threaten their status).
I agree that fine-grained predictions of a firm or an industry's behavior will not be possible with such a model. But whether the model is good or not depends on what you're comparing it to and what you're using it for. So what would you like to compare it to? What is your preferred model?
To be more specific, lets take Microsoft. I think that for many purposes, it is useful to think of Microsoft as attempting to maximize long-term profits.