The French academic Jean Tirole, 61, a professor at the University of Toulouse, has been awarded the Swedish Central Bank in Economic Sciences, commonly known as the Nobel Prize in Economics. Tirole, one of the favortios in recent editions of the awards, specializes in microeconomics, extremely influential studies in the academic literature on market power and regulation.
According to the website of the Fed San Luis, who collects quotes from researchers, is the eighth most cited researchers in the world economy. Tirole also is the author of the reference textbook on industrial organization.
In an interview in the newspaper El País, in 2005, defended Tirole a Spanish electricity market can not function with only three or four operators: To solve this problem advocated open to competition from other countries different local markets.
According to the analysis of Tirole, many industries are dominated by a small number of large companies or a monopoly; if left unregulated, these markets produce “socially undesirable effects” such as higher prices or costs unproductive companies that survive by blocking the entry of new competitors, according to the Swedish Academy. “His analysis of firms with market power provides a unified theory with a strong influence on central policy issues: how a government should deal with mergers or cartels and how it should regulate monopolies,” says
<. p> When to regulate or legislate on companies that have dominant positions, Tirole argues that certain measures have different implications depending on their competitive or technological context, in order to encourage companies to be more productive without harming competitors or consumers. Otherwise, the regulation may have different effects than are desired.
But Tirole favor of the liberalization of services, resulting in lower prices. But it is only if supported by efficient regulation and an independent regulator.
Tirole’s work also raises other questions. Which activities must conduct the public sector and what impact has open state monopolies to private investors? Tirole asks what motives behind these processes make companies do not always take the expected decisions. The market power of dominant firms and information asymmetries between firms operating in a market and the regulator that oversees how they do it is another factor that affects these processes.
Tirole, early 80s, dealing with research on regulatory processes and reactions regulated from game theory, ie, explaining what the consequences of the decisions of supervisors in the behavior of both dominant firms and the rest of actors. However, the approach proved more complex than expected, and Tirole depth analysis of the internal organization of the company, technology and market, as well as the role and regulatory decision making.
In fact, relations between firms and regulator are not stable over time: the decision of the regulatory action by the company that has consequences in the following regulation is applicable. Thus, if a producer makes great efforts in reducing costs (and benefits a) controller can tighten the nuts on the forthcoming regulation, so the company ceases to improve efficiency. It’s the kind of dilemma facing Tirole in their work
Another example of the work of Tirole is affecting supply chains. Whether a company has a monopoly in one phase of the production process, in normal conditions (ie, before a group of customers competitive with each other) limited its ability to impose market power, but may have incentives to restrict supply and “create” another monopoly at the next level.
This is another of the dilemmas posed by Tirole: how to encourage innovation without punishing competencia.En 1983 drafted an investigation are Joseph Stiglitz (Nobel 2001) on patent races between firms
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