Economics Nobel Prize awarded
October 13, 2014
The Nobel Prize in Economics has gone to French economist Jean Tirole for his analysis of market power and regulation, the Royal Swedish Academy of Sciences announced in Stockholm Monday.
"Jean Tirole is one of the most influential economists of our time," the Academy said. "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."
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. But in the wake of the global financial crisis, he has argued for stronger regulation of banks.
The 61-year-old Troyes native said he was "very honored" and "moved" upon winning the 2014 Nobel Prize in Economics, while talking on the telephone to reporters during the announcement.
He is the third Frenchman to win the award, the others being Gerard Debreu in 1983 and Maurice Allais in 1988.
'The science of taming powerful firms'
Tirole is the sole winner of this year's prize - a contrast to previous years, as the award is often shared by two to three economists. Last year, the honor was shared by Eugene F. Fama and Lars Peter Hansen, both of the University of Chicago, and Robert J. Shiller, of Yale University, for their work in analyzing asset prices.
Tirole is the scientific director of the Industrial Economics Institute (IDEI) at the Toulouse School of Economics, where he developed his ideas about the impact of regulation on industrial organizations using game theory.
His research demonstrated how market regulations should be carefully adapted to the conditions of specific industries, rather than general regulations such as price caps, which can do more hard than good, according to the Academy.
"From the mid-1980s and onwards, Jean Tirole has breathed new life into research on such market failures," the Academy said, noting 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 added.
In his book "The Theory of Corporate Finance," Tirole advanced a unified theory on how corporations operate in the modern era.
Before Tirole, the Academy said, policymakers advocated simple rules including capping prices for companies with a monopoly and banning cooperation between competitors.
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.
Tirole holds engineering degrees from Ecole Polytechnique in Paris and from Ecole Nationale des Ponts et Chaussées, as well as a Ph.D. from the Massachusetts Institute of Technology.
Not quite like the others
The economics prize, officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is not one of the original Nobel Prizes established by Swedish industrialist Alfred Nobel in his 1895 will. It was endowed in 1968 by the Swedish central bank, the Sveriges Riksbank, in connection with its 300th anniversary.
Awarded annually since 1969, the economics award is worth 8 million kronor (876,000 euros, $1.1 million) - the same as the other Nobel prizes.
Around 85 percent of laureates are US economists. In 2009, American Elinor Ostrom became the first woman to be awarded the prize. Previous winners include Paul Krugman, Milton Friedman, Friedrich August von Hayek and Joseph Stiglitz.
This year's prizes in medicine, physics, chemistry, literature and peace were already announced last week.
The Nobel awards, with the exception of the Peace Prize, are set to be presented in Stockholm on Dec. 10, the anniversary of Nobel's death.
el/sgb (dpa, Reuters, AP, AFP)