Jean Tirole, a French academic, was named winner of the Nobel prize in economics for his pioneering analysis of regulatory intervention in markets dominated by a few companies, work that includes analysis of an optimal policy to “jump start” financial markets in a crisis.
Mr. Tirole, president of the School of Economics of Toulouse, the Université Toulouse 1 Capitole, was recognized by the Royal Swedish Academy of Sciences, Stockholm, which awards the prize.
The academy in a news release called him “one of the most influential economists of our time.”
He will be awarded the 8 million Swedish krona ($1.1 million) Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
“Jean's work is voluminous, and has touched the world of investment management in several ways,” Josh Lerner, the Jacob H. Schiff Professor of Investment Banking, and head of the entrepreneurial management unit at Harvard Business School, said in an e-mailed response to questions.
“Much of his work has focused on the issues around regulation, either in general or in specific contexts such as banking. This has highlighted the deleterious effects of self-interest on the part of regulators and the way in which institutions can be designed to limit these issues,” said Mr. Lerner. He has co-authored research papers with Mr. Tirole and is cited in the scientific discussion paper about the award
“In particular, he has explored at length the tradeoffs between stringent rules that prevent banking crises in the first place and the cleanup of crises after they occur,” Mr. Lerner said.
“More recently, he has examined how to 'jump start' a financial market after a crisis,” Mr. Lerner said.
Bruce I. Jacobs, principal, Jacobs Levy Equity Management Inc., said in an e-mailed response to questions: “The essence of (Mr. Tirole's) work is that one-size-fits-all regulatory regimes can sometimes do more harm than good.
“(Mr.) Tirole has enriched economic theory by creating models that better reflect the complexity of real-world practice and thus provide more effective guidance for the regulation of economic and financial systems,” Mr. Jacobs said.
“Much of (Mr.) Tirole's work seeks to identify regulatory policies that will maximize the benefits to firms and their shareholders, while minimizing the costs to consumers and taxpayers. Such economically efficient regulation can do much to reduce the kinds of regulatory frictions that can hamper corporate performance.”
In addition, Mr. Jacobs said, “his work on systemic risk and financial crises looks at the need for regulation of banks and other financial intermediaries.”