French economist Jean Tirole has been named the winner of the prestigious Nobel Memorial Prize for Economic Science for 2014 for his work on market power and regulation of large corporates. Tirole has been awarded SEK 8 million ($1.1 million) prize by the Royal Swedish Academy of Sciences.
The 61-year-old economist, who has been working since early 1980s on ways to tame the dominance of single or a number of powerful companies, is currently scientific director of industrial economics at Toulouse University in France and earned his PhD in economics from Massachusetts Institute of Technology in 1981.
Tirole has helped economists and policymakers through his microeconomic research to understand how powerful corporates should be regulated so as to prevent being damaged by their monopolistic behaviour.
“Jean Tirole is one of the most influential economists of our time. He has made important theoretical research contributions in a number of areas, but most of all he has clarified how to understand and regulate industries with a few powerful firms,” Royal Swedish Academy of Sciences noted on its website.
As per the academy, before Tirole’s research in the 1980s, research on regulation focused primarily on the abstract: how to control pricing in either a monopolistic market or one that exhibited perfect competition.
Tirole said new regulatory tools were required to address problems in oligopolistic markets, including regulation that addressed the problem of asymmetric information, in which regulators didn’t have as much information about the companies they regulate as do those companies.
“From the mid-1980s and onwards, Jean Tirole has breathed new life into research on such market failures. His analysis of firms with market power provides a unified theory with a strong bearing on central policy questions: how should the government deal with mergers or cartels, and how should it regulate monopolies,” the committee said.
Tirole co-authored much of his work with his colleague Jean-Jacques Laffont, who died in 2004 and has been referenced heavily in the Nobel Committee's examinations of Tirole's work. Tirole is working as chairman of the board at the Jean-Jacques Laffont Foundation at the Toulouse School of Economics.
(Edited by Joby Puthuparampil Johnson)