French economist ‘ breathed new life’ into markets regulation
Jean Tirole credited with helping drive the deregulation of industries in developed economies in the 1980s and ’ 90s
STOCKHOLM — French economist Jean Tirole won the Nobel Prize for economics Monday for research on market power and regulation that has helped policy- makers 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 PhD 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 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.
Jean Tirole’s) contribution is that he has given us a whole tool box. TORSTEN PERSSON NOBEL PRIZE COMMITTEE SECRETARY
“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.
His work is credited with helping drive the deregulation of industries in developed economies in the 1980s and 1990s, when many sectors were dominated by state- owned companies or monopolies. More recently, however, Tirole has argued for stronger regulation after the global financial crisis.
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, adding his research “does not advocate necessarily more or less of the state, but rather better state intervention.”
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 of banks after the global financial crisis. “Tirole is at the frontier of this domain,” Aghion said.
It was the first economics prize without an American winner since 1999.
“His contribution is that he has given us a whole tool box,” prize committee secretary Torsten Persson said. “More than that, he has given us an instruction manual for what tool to use in what market.”