Jean Tirole became the second Frenchman to receive a Nobel Prize this year, winning the Economic Sciences award for his research into curtailing the power of oligopolies.
Traditional economic theory does not deal with the case of the oligopoly, i.e. many markets dominated by a few firms that all influence prices, volumes and quality, instead it presupposes a single monopoly or what is known as perfect competition. Also, the regulatory authority lacks information about the firms’ costs and the quality of the goods and services they deliver. thus providing regulated firms with a natural advantage. Tirole has researched into the means of dealing with these issues regarding this market system.
Read/Skim through this summary of Tirole’s work and then read FT’s Jean Tirole: 5 things to know about the Nobel Prize winner’s work… Maybe try and answer some of the questions yourself before reading the answers…
What were Mr Tirole’s most important contributions?
What were his crucial findings on regulating oligopolies?
What about competition policy?
Within what context has Mr Tirole won the prize?