Pounding Square Pegs into round Holes: Another Look at the Neoclassical Theory of Predatory Pricing

For more than forty years, economists have routinely rejected the postulate that economic theory should be realistic. Ever since Milton Friedman sketchily outlined a positive methodology for economics, most students of our science have come to endorse Friedman’s view and have claimed that the only quality standard of economic reasoning was its predictive power. Good theories yield fairly correct predictions whereas bad theories yield wrong predictions. . . . Today, the utter failure of this program is patent. (p. 3)