Tirole was the third French economist to win this particular Nobel prize, following Maurice Allais in 1998 and Gérard Debreu in 1983, incidentally when he had also acquired US citizenship. He was also the second French economist to steal the global limelight during the year, after Thomas Piketty made headlines with his bestseller, Capital in the Twenty-First Century.
Born in 1953, Tirole was a remarkable student, obtaining degrees from France’s top scientific universities, École polytechnique and École nationale des ponts et chaussées, before earning his PhD from the Massachusetts Institute of Technology. With characteristic scientific and mathematical rigour, Tirole has strived to make economics resemble a pure science like any other. He pushed the research frontier with important theoretical advances in the field of industrial organisation, notably with his analysis of structure and competition among companies. While economists had a good understanding of markets based on perfect competition on the one hand and markets dominated by monopolies on the other, Tirole brought new insights to a more elusive area in between: how companies work together to secure dominance, or behave in oligopoly, as is frequently found in sectors such as information technology and telecommunications. Tirole has argued that there is no single solution to regulating oligopolies per se, and that, instead, industry-specific approaches are necessary.
Indeed, the best of practice in regulation has been industry-specific for some time now–that is, separate approaches for telecommunications, media, transportation and other sectors–so as to tailor regulatory policy to foster entry of new players, more competition, higher welfare and more dynamic innovation.
His work could hardly be more pertinent today, and thanks to Tirole, policymakers and bodies such as the OECD now have a rigorous framework that can be applied to analyse market dominance in various guises, from corporate giants such as Google and Apple, through competition among credit card providers to the effect of “free” newspapers on the traditional press. Beyond being a great scholar, Tirole is also a remarkable teacher, with one of his greatest accomplishments having been the establishment of the Toulouse School of Economics (TSE), created jointly with the late Jean-Jacques Laffont and now winning worldwide acclaim in one of France’s most innovative cities. The OECD also benefits from this, with several staff members having been educated at TSE. So, many thanks to you, Professor Tirole!
Visit Toulouse School of Economics at www.tse-fr.eu
See also: More information on Jean Tirole
Jean Tirole on the CNRS website
©OECD Observer No 301, Q4 2014