Frenchman wins Nobel in economics
STOCKHOLM, Sweden — French economist Jean Tirole won the Nobel prize for economics Monday for research on market power and regulation that has helped policymakers understand how to deal with industries dominated by a few companies.
Calling Tirole “one of the most influential economists of our time,” the Royal Swedish Academy of Sciences said he’s made contributions in a range of research areas. But it highlighted his role in clarifying “how to understand and regulate industries with a few powerful firms.”
Tirole, 61, works at the Toulouse School of Economics in France and has a Ph.D. from Massachusetts Institute of Technology.
Left unregulated, industries that are dominated by a few single firms can produce undesirable results, such as unnecessarily high prices or unproductive companies blocking new competitive firms from entering the market. From the mid-1980s, Tirole “breathed new life into research on such market failures,” the academy said, adding his work has strong bearing on how governments deal with mergers or cartels and how they should regulate monopolies.
“In a series of articles and books, Jean Tirole has presented a general framework for designing such policies and applied it to a number of industries, ranging from telecommunications to banking,” the academy said.
Harvard University professor and economist Philippe Aghion said on France’s BFM television Monday that Tirole’s work is particularly useful to governments as they try to determine the best level of regulation, notably regulation of banks after the global financial crisis in 2008. “Tirole is at the frontier of this domain,” Aghion said.
In a 2012 interview, Tirole told the financial journal Les Echos that the 2008 financial crisis stemmed primarily from regulatory failure. “The vision according to which economists have unlimited trust in the efficiency of markets is 30 years behind the times,” he said.
It was the first economics prize without an American winner since 1999.
“I’m so moved,” Tirole said, speaking to a news conference in Stockholm on a telephone link from Toulouse.
Before Tirole, the academy said, policymakers advocated simple rules including capping prices for companies with a monopoly and banning cooperation between competitors. Tirole showed that in some circumstances, such rules can do more harm than good.
Drawing on insights based on Tirole’s work, “governments can better encourage powerful firms to become more productive and, at the same time, prevent them from harming competitors and customers,” the academy said.
The economics prize completed the 2014 Nobel Prize announcements.