Jean Tirole wins Nobel Prize for economics

Jean Tirole, a French academic, has won the Nobel Prize for economics for his work on how to tame the power of oligopolies.

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

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, The Financial Times reports.

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 after the announcement that Prof Tirole’s award was “not really a political prize”.

“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. 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.

Prof Tirole was one of the founders and the first president of the Toulouse School of Economics, one of the most prestigious institutes covering the discipline in France.

Although usually called the “economics Nobel,” economics was not one of Alfred Nobel’s original prize categories. The economics “Nobel” was founded in 1968 by the Svierges Riksbank, the oldest central bank in the world, to celebrate its 300th anniversary.

Last year, the Nobel went to three American academics – Eugene Fama, Lars Peter Hansen and Robert Shiller – for their work on what drives asset prices. Mr Fama is famous as the father of the “efficient markets hypothesis, while Yale’s Bob Shiller is a famous critic of that hypothesis.

Economics Nobel Prize winners tend to be older than winners in other categories: their average age is about 67, compared with an average age of 59 among all Nobel Prize winners.

The youngest winner of an economics Nobel was Kenneth J Arrow, who was 51, and the oldest was Leonid Hurwicz, who was 90. Only one woman, Elinor Ostrom, has been awarded the prize so far.