Are profit-maximisers the best survivors?: A Darwinian model of economic natural selection

This paper demonstrates that the Friedman conjecture that profit-maximisation ‘summarises appropriately’ the conditions for firm survival is not generally true. If firms have market power, profit-maximisers are not necessarily the best survivors because of the possibility of ‘spiteful’ behaviour of the following kind. Say a firm forgoes profit-maximisation and thus decreases its survival chances, but its deviation from maximisation harms its profit-maximising competitors more than itself. Though the firm will be less likely to survive than it would if it maximised its profits, it will still be more likely to survive than its competitors.