French economist Jean Tirole won the 2014 Nobel Prize for economics for work that has shed light on how states can “tame” the big businesses that dominate formerly public monopolies such as 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 krona ($1.1m) prize.
The academy said Mr Tirole had clarified policies about regulating industries with a few powerful firms, especially after a wave of privatisations had set governments a conundrum over how to encourage private investments in sectors such as healthcare and railways while reining in profits.
“I’m very honoured,” Mr Tirole said on Monday.
He 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,” Mr Tirole said in Toulouse, where he is a professor at the school of economics.
In a 2012 French media 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.
Mr 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 organisation. 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 an understanding of how to think about regulating firms, that there is not one size fits all.”
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 the 1895 will of Nobel, the inventor of dynamite.