By Dimitrije Tasic
Several days ago, the Royal Swedish Academy of Sciences selected Jean Marcel Tirole to be the 75th recipient of the Nobel Prize in Economics. This French economist (the third Frenchman ever to receive this award and 23rd non-American) comes from the Toulouse School of Economics and is recognized for his analysis of market power and regulation. According to the Academy, his work has clarified “how to understand and regulate industries with a few powerful firms.”
The focus of his research is diverse and ranges from industrial organization of the banking and financial sectors to psychological aspects of economics. The Nobel committee, however, particularly noted his contribution to the regulation of monopolies and oligopolies. In a series of articles and books, Jean Tirole has presented a general framework for designing regulatory policies and applied it to a number of industries, ranging from telecommunications to banking. His work fits well into the contemporary debate about causes of the 2008 financial crisis. In his framework, the crisis has been a direct consequence of unregulated markets.
In addition to his work on regulating industries with a few powerful firms, he also has many proposals regarding the ways governments can combat unemployment. He suggests an introduction of a new employer-employee contract, which would ensure an increase of employees’ rights as a function of years of work.
It is interesting to note that last year’s recipient of this award, American economist Robert J. Shiller, was also recognized for work focused on market failures. Their findings are considerably different from the so-called Chicago school, led by Milton Friedman, whose liberal dogma of the free market that regulates itself was generally accepted in previous decades.
Tirol is also is a strong supporter of European integration. In his opinion, the Eurozone’s banking union, which attempts to smooth differences among its eighteen countries’ national regulations, is a “superb idea.”