Jean Tirole wins Nobel Prize for Economics

Jean Tirole, a French academic whose work on how to tame the power of oligopolies has helped change the way companies are regulated, won a rare solo Nobel Prize for economics.

The Royal Swedish Academy of Sciences said Mr Tirole was “one of the most influential economists of our time”. His biggest contribution was to clarify “how to understand and regulate industries with a few powerful firms.”


Mr Tirole, one of the founders of the prestigious Toulouse School of Economics and the world’s 11th most-cited economist, has long been regarded as a likely winner of the prize. The decision to make him a rare solo winner shows the depth of his influence on creating a new way to look at competition.

For the academy, which confers the Riksbank prize in memory of Alfred Nobel, it marks a return to the less contentious realm of pure economic theory after last year’s award went to Robert Shiller, Eugene Fama and Lars Peter Hansen for their sometimes conflicting work on asset pricing and efficient markets.

“There’s not any one thing, there’s so much,” said Paul Klemperer, a professor at Oxford university. “He changed the way people think about industrial organisation.”

“He has been a leader in reshaping our understanding of competition policy away from simple models of perfect markets to a recognition that different contexts require different solutions,” said Mr Klemperer.


In a sign of his influence on policy makers, Pierre Moscovici, incoming European Commissioner for economic and financial affairs and a former French finance minister, said Mr Tirole’s “work illuminates the paths we should follow to end the crisis.”

Professor Tirole, who was born in 1953, is famous for his analysis of companies with market power. He showed that simple policy rules, such as capping prices for monopolies, sometimes did more harm than good.

Instead, through his articles and books, he generated a general framework for designing better policies and applied it to a number of industries, from telecommunications to banking. His work has shaped the regulation of big computer companies such as Microsoft and Google.

For example, a monopoly supplier may affect competition in a downstream market, or temporary monopolies may make sense when innovation is extremely rapid.

The Academy said his work was a “splendid example of how economic theory can be of great practical significance.”

Tore Ellingsen, chairman of prize committee, said: “Like an engineer, he offers a toolkit for problem solving that is applicable no matter what your political preference,” he said. “It’s been clear for some time that Jean Tirole is a worthy recipient and the question has been precisely for what . . . and when.”

Prof Tirole started to work on regulation and oligopolies in the 1980s, using new methods at the time such as game theory and contract theory. His work coincided with a time of great public policy interest in the topic as governments pursued privatisations and pro-competition regulatory reforms. He built coherent theories and frameworks that replaced ad hoc assumptions, but also adapted them to the specifics of different industries.

He “penetrated deep into the most central issues of oligopolies and asymmetric information, but he has also managed to bring together his own and other’s results into a coherent framework for teaching, practical application, and continued research”, the Academy said. He is the first French person to win the prize in more than 25 years.

With the Nobel Prize for literature going to French author Patrick Modiano last week, the award for Mr Tirole prompted joy in France. Manuel Valls, prime minister, said it “makes a mockery of French-bashing”.

Tyler Cowen, chair of economics at George Mason University, said the award this year was “a theory prize”. He thought of Prof Tirole as “in the tradition of French theorists starting with Cournot in 1838 and Jules Dupuit in the 1840s, economics coming from a perspective with lots of math and maybe even some engineering.” He is also renowned as “an excellent teacher and a very nice person,” Prof Cowen added.




Fonte: FT