Taming business wins Nobel for French economist
Print Edition
FRENCH economist Jean Tirole has won the 2014 Nobel Prize for economics for work that has shed light on how governments can “tame” the big businesses that dominate once public monopolies like railways, highways and telecommunications.
“This year’s prize in economic sciences is about taming powerful firms,” Staffan Normark, Permanent Secretary of the Royal Swedish Academy of Sciences, told a news conference after awarding the 8 million Swedish crown (US$1.1 million) prize.
The academy said Tirole has clarified policies about regulating industries with a few powerful firms, especially after a wave of privatizations had set governments a conundrum over how to encourage private investment in sectors like health care and railways while reining in profits.
Tirole has worked for decades on the effects of credit bubbles and said the 2008 to 2009 financial crisis was above all the result of insufficient regulatory institutions.
“I think banking is a very hard thing to regulate and we economists and academics have to do more work on this,” Tirole said yesterday, speaking from Toulouse, where he is a professor at the school of economics.
In a 2012 interview, he said it was “shocking” how US authorities had supported investment banks which, because they did not have small depositors, were not subject to full regulation.
His Nobel award was hailed by Emmanuel Macron, the former merchant banker who is now France’s economy minister.
“Huge congratulations to Jean Tirole who does our country and French economic learning proud,” he tweeted.
Tirole’s research showed market regulations should be adapted to the conditions of specific industries rather than general principles that would apply to every industry, the academy said.
“He has been the dominant figure in industrial organization. It was not a question of whether but when he would be awarded the prize,” said Oxford University economics professor Paul Klemperer. “It has given us understanding of how to think about regulating firms, that there is not one size fits all.”
The economics prize, established in 1968, has been dominated by economists from the United States with only a few winners coming from other parts of the world since 1994.
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