Monday, October 13, 2014

Nobel Prize in Economics Awarded to Jean Tirole

Prof. Jean Tirole has been awarded the 2014 Nobel Prize in Economics for his analysis of market power and regulation.

His work, according to the Nobel committee, is focused on the question of  how should governments deal with mergers or cartels, and how should it regulate monopolies?

Tirole argues that price caps can provide dominant firms with strong motives to reduce costs but may also permit "excessive" profits.  He argues that cooperation on price setting within a market is usually harmful, but cooperation regarding patent pools can benefit everyone. The merger of a firm and its supplier may encourage innovation, but may also distort competition.

The best regulation or competition policy should therefore be carefully adapted to every industry’s specific conditions, argues Triole.

This analysis flies in the face of the important Austrian school monopoly theory developed by Murray Rothbard,
 which sees monopoly as an exclusive government grant of special privilege to operate, preventing competitors.

His further role in "the increasing mathematization of formal propositions as a way of understanding economic theory," is a further reason for disappointment by Austrian school economists in this award.

Books by Tirole include:


  1. so, Prof Tirole, how does you work account for regime capture? it doesn't? hmmm.

  2. Congrats! Such recognition of great thinkers is an imperative for human development. As the human society moved from hunters, gatherers. .. into communism, socialism, market capitalism, .. to so called democratic capitalism.. we need to encourage such thinkers to help us how can we live and work in a care and share manner in the fast changing and advancing era of science and technologies.

  3. "Tirole argues that price caps can provide dominant firms with strong motives to reduce costs but may also permit "excessive" profits."...does this thinking hold true with gov't/currencies, too??

    Faber's likely last time on BNN: Gold and silver markets are manipulated

    As soon as Faber made his declaration on BNN's "Business Day" program, moderator Frances Horodelski cut him off, asserting that time had run out.

    Horodelski asked Faber if gold would reverse upward with other commodities when the U.S. dollar falls. Faber replied: "Precious metals can still go lower, because, as some knowled

    geable people have proven, the markets are manipulated. But I don't think they will stay low. I think they may go lower temporarily and then rebound strongly, and if I were a reader, I would no longer trust central banks, and [instead] say, 'I want to be my own central bank and have some gold and silver stored in a safe place, certainly not in the U.S."

    BNN's likely final interview with Faber is 9 minutes and 22 seconds long, with the comments about gold and silver market manipulation coming at the 8:15 mark. Until BNN takes it down, it can be watched at the network's Internet site here: