This week it was announced that Jean Tirole has won the 2014 Nobel Prize Memorial Prize in Economic Sciences.
This is fantastic news for the discipline. Too often the Nobel goes to financial economists who describe models of perfectly competitive, all-knowing financial markets, emotionless, rational customers and mechanical, objective regulators. Eugene Fama, I’m looking at you.
Most human beings know that the world they experience every day rarely operates like this. Jean Tirole is one of these people. His work is based on the idea that markets are messy, and often dominated by a few large and powerful firms. His conclusion is that different markets need different types of regulation: that there is no one-size fits all for economic regulation.
There are many areas in which Tirole’s research can be applied to my everyday work with monopolies, oligopolies, patent-pools, two-sided markets, and regulators. Most importantly, by arguing that every industry needs specific and different regulations, and therefore that the development of regulation is a necessary and legitimate specialism, Jean Tirole is helping keep me in a job!
You can read the Royal Swedish Academy of the Sciences’ background piece on Tirole’s work here. It is short, interesting and the perfect topic to have in the bag if you happen to be stuck next to an economist at a dinner party.