Frances Jean Tirole wins Nobel for economics

Written by Agencies | Stockholm/Paris | Updated: Oct 14 2014, 06:29am hrs
Jean TiroleJean Tirole, 61, will receive an 8-million-krona ($1.1 million) prize. AP
French economist Jean Tirole 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 years prize in economic sciences is about taming powerful firms, Staffan Normark, permanent secretary of the Royal Swedish Academy of Sciences, told a conference after awarding the prize.

The prize was awarded for his work on how to understand and regulate industries with a few powerful firms, the Royal Swedish Academy of Sciences, which selects the winner, said in a statement on Monday. Tirole, 61, will receive an 8-million-krona ($1.1 million) prize.

Im very honoured, Tirole told a conference over phone. From the mid-1980s and onwards, Tirole has breathed new life into research on such market failures, the academy said. His analysis of firms with market power provides a unified theory with a strong bearing on central policy questions: how should governments deal with mergers or cartels, and how should it regulate monopolies

The recognition of the prize has helped previous winners bring their econimic theories closer to policy making.

The main insight of Tirole was to show that the best regulation was adapted to each industrys specific conditions, the academy said. He was able to present a general framework for designing policies and applied it to industries ranging from telecommunications to banking, according to the academy. Drawing on this, governments can better encourage powerful firms to become more productive and, at the same time, prevent them from harming competitors and customers.

Tirole first trained to be an engineer in France and went on to get a doctorate in mathematics from the University Paris-Dauphine in 1978 and a second doctorate in economics from the Massachusetts Institute of Technology in 1981. He holds honorary doctorate degrees at institutions such as the London Business School and the University of Rome Tor Vergata.

The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It was not part of the original group of awards set out in 1895 will of Nobel, the inventor of dynamite.