Full reaction, as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is won by French economist Jean TiroleSummary: Tirole recognised for work regulating big business 4.30pm BST And thats a good time to stop. 4.28pm BST And finally, over to the man himself.The Nobel Prize team have uploaded in interview with Jean Tirole, in which he explains how he told his wife about his win, and then his mother:Oh, I first, to be honest, she is 90 years old and I first ask her to sit before I told her of the news. [Laughs] So, but yes, she was, my mother used to be a teacher, French and Latin and Greek teacher. You know, knowledge is very important to her, very important. And of course, for my wife and my children also. I see one of my daughters is on Skype with me from London and in fact it is actually quite moving for the whole family of course.Jean-Jacques Laffont passed away.. and deserved to be with me today in this Prize for regulation and competition policy. 4.19pm BST Now the Nobel awards are over, Swedish newpaper The Local has announced its Alternative Nobel Prize list.Heres a flavour:Worst Example of Gender Equality: We werent impressed by the not-very-noble fact that there were only two female winners out of a total 13 laureates. But considering there have been hardly any women Laureates at all in the past, were moving in the right direction. Most Helpful Simile: The Nobel Committee in Chemistry did a good job in helping us all understand the laureates work with microscope and molecules. They compared it to looking at a city of buildings but not being able to see the people inside them. The laureates work allowed us to see these people inside. Still dont get it? Read more. 4.12pm BST 4.00pm BST European Commission Vice President Joaquín Almunia, who leads competition policy across the EU, has warmly congratulated Jean Tirole. Almunia, who has probed Google for years and announced huge fines on Europes banks for market abuses, says Tiroles work has made a difference.For competition enforcers, his work has been of major importance. He is one of the sharpest economic theorists having contributed to our understanding of market power and how regulation may effectively curb it. We owe Jean Tirole so much. His work has been central to the economic analysis underpinning many of our instruments in competition policy and beyond. This includes work on vertical agreements, mergers, competition in network industries and so much more. I finally also wish to pay tribute to Jean Tiroles renowned humility. 3.50pm BST OK, heres your homework, class.The Council for Foreign Relations has rounded up links to many of Jean Tiroles papers on competition policy and regulation. Theyre looking for intelligent comments on them too: 3.36pm BST Heres another photo showing Jean Tirole, right, being congratulated by colleagues at the Toulouse School of Economics: 3.35pm BST Over in Quartz, Tim Fernholz has explained how Jean Tiroles work has plenty of applications for politicians grappling with new technology.Used correctly, it helps governments get to grips with new platforms such as Netflix, and understand why some software is released under open source licences.In countriesindeed, in most of the worldwhere it is assumed that market competition generates the most prosperity, there are still markets that allow monopolies or near-monopolies: communications and transportation networks, military materiel, natural resources. Governments need strategies to regulate monopolistic behavior and prevent dominant companies from jacking up prices on everyone, but they also need to avoid forcing prices so low as to make the business unsustainable. 3.20pm BST Jean Tirole has enjoyed a heros welcome back in Toulouse, as this photo shows:Standing ovation for Jean Tirole Nobel 2014 in Economics @TSEinfo @UT1Capitole pic.twitter.com/xQdtPbod4P 3.19pm BST If you missed todays announcement, dont worry. The Nobel Prize team have done a brilliant job uploading video clips explaining why Jean Tirole won.Here are some of the best:Announcement of the 2014 Prize in Economic Sciences #nobelprize2014 http://t.co/fSgeGz84Z2"They don't dominate the market because they are productive" #nobelprize2014 http://t.co/ouHrnT6HrLThe bright side and the dark side #nobelprize2014 http://t.co/YfIyuz1E19"The beauty of Tirole's work" #nobelprize2014 http://t.co/JJyDNetMaP 3.09pm BST Our economics editor, Larry Elliott, is on sparkling form explaining why Jean Tiroles work deserves such recognition.Heres a flavour:It could be argued that Googles Eric Schmidt is as powerful today as John D Rockefeller was when he was at the helm of Standard Oil. Booksellers worry about the dominance of Amazon.What the judges liked about Tirole was that his work goes beyond dispensing general advice to regulators about how to prevent market abuses. Rather, he insists that there is no one size-fits-all solution, and that each industry must be regulated according to its own structure. What is needed for banking will differ from whats needed for the online search sector. 3.02pm BST French Prime Minister Manuel Valls has also welcomed Frances double success at this years Nobel awards, tweeting that:After Patrick Modiano, another Frenchman in the firmament. Congratulations to Jean Tirole. A thumb in the eye for French bashing, Après Patrick Modiano, un autre Français au firmament : félicitations à Jean Tirole! Quel pied-de-nez au french bashing ! #FiersdelaFrance 2.56pm BST George Cooper, the financial author (see previous post), agrees with Tyler Cowen that the Swedish Academy have made a good choice.Handing the prize to Jean Tirole, for his work on effective regulation, is an implicit recognition that markets are not efficient and that regulation is necessary, said Cooper. Moving beyond the efficient market hypothesis (EMH) dogma is a is sign of progress. 2.49pm BST Danny Blanchflower, labour market economist and former Bank of England policymaker, has criticised the choice of Jean Tirole.He suggests that the judges should reward economists who discover actual laws that work in the real economy, rather than those who merely theorise:more theory =about time the Nobel econ committee started to award prizes to people who discover empirical facts about how the world worksIf economics is to be considered a science there ought to be some fundamental empirical laws - so what are the patterns in the data?the internal inconsistencies between economic theories - the apparently unresolvable debates between leading economists and the incoherent policies of our governments - are symptomatic of economics being in a crisis..... 2.30pm BST A nice photo of Jean Tirole at work:Jean Tirole, French professor of economics, banking and finance wins 2014 Nobel Prize for Economics pic.twitter.com/NUtFsZdnM1 2.29pm BST Its been a good few days for France -- Tirole follows compatriot Patrick Modiano, who won the Nobel Prize for Literature on Thursday. Can this be the same France that was dismissed as a washed-up, finished economy by the boss of UK retail chain John Lewis earlier this month? French men have now won this year's Nobel Prize for both Literature and Economics - no comment as yet from John Lewis 2.26pm BST Congratulations to French professor Jean Tirole, who has been awarded the 2014 Nobel Prize in Economics! #nobelprize2014 2.21pm BST Tyler Cowen also explained how Jean Tiroles work examines how contractors can sometimes sting governments by demanding extra fees to deliver a contract on time:Another good passage about Tirole's work from @tylercowen http://t.co/WdikAmDIeQ pic.twitter.com/3J1Hs1ZpGm 2.16pm BST An excellent and well-deserved pick.Thats how US economics professor Tyler Cowen, of George Mason University, responded to the news that French professor Jean Tirole has won the Sveriges Riksbank Prize in Economic Sciences.A theory prize! A rigor prize! I would say it is about principal-agent theory and the increasing mathematization of formal propositions as a way of understanding economics. He has been a leading figure in formalizing propositions in many distinct areas of microeconomics, most of all industrial organization but also finance and financial regulation and behavioral economics and even some public choice too. He is a broader economist than many of his fans realize.Tirole is a Frenchman, he teaches at Toulouse, and his key papers start in the 1980s. In industrial organization, you can think of him as extending the earlier work of Ronald Coase and Oliver Williamson with regard to opportunism and recontracting, but applying more sophisticated and more mathematical forms of game theory. Tirole also has been a central figure in procurement theory and optimal contracts when there is asymmetric information about costs. The idea of mechanism design runs throughout his papers in many different guises. Many of his papers show its complicated, rather than presenting easily summarizable, intuitive solutions which make for good blog posts. That is one reason why his ideas do not show up so often in blogs and the popular press, but they nonetheless have been extremely influential in the economics profession. He has shown a remarkable breadth and depth over the course of the last thirty or so years.....You should read @tylercowen on Jean Tirole http://t.co/WdikAmDIeQ h/t @JHWeissmann 2.09pm BST Heres our City editor Jill Treanor on todays award:Jean Tirole the French economist who has used game theory in an attempt to find ways to control the dominance of major companies has won the Nobel prize for economics.Tirole, of the University of Toulouse, said he was very grateful for the award for his work on taming powerful firms.Jean Tirole wins Nobel prize for economics 2014 http://t.co/qDBVdCyKxx 1.48pm BST Pierre Moscovici, the former French finance minister, has offered his congratulations to Jean Tirole.Moscovici, who is now joining the EU commission as finance chief, adds that Tiroles work informs the paths we need to follow to get out of the crisis.Bravo à Jean Tirole, prix Nobel d'économie, dont les travaux éclairent les chemins que nous devons suivre pour sortir de la crise 1.34pm BST Tore Ellingsen, permanent secretary of the Royal Swedish Economy, has given an interview explaining that Jean Tirole won his prize for his work on market power and regulation.Small firms want to become big. But once you are a big firm, the profit market is maybe not benign. You may want to dominate the market, to exploit your customers, to exclude competitors.So the question is, what kind of regulation and competition policy do you want to put in place, so that large and mighty firms will act in societys best interests. 1.13pm BST The Swedish Academy also produced a nifty graphic, showing how regulators can struggle to keep a monopoly in check if they havent got all the information the need (thus the blindfold): 1.07pm BST Professor Jean Tirole of the Toulouse School of Economics in France, has been awarded the prestigious Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.Tirole showed theoretically that such rules may work well in certain conditions, but do more harm than good in others. Price caps can provide dominant firms with strong motives to reduce costs a good thing for society but may also permit excessive profits a bad thing for society. 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. 12.44pm BST Winning the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is clearly an emotional moment - the highlight of many glittering careers...."It took me half an hour to recoup from the call" Jean Tirole on being awarded the Prize. http://t.co/B0vLAKQGhM's interview coming up soon! 12.43pm BST BREAKING NEWS: #nobelprize2014 in Economic Sciences to French Jean Tirole @UT1Capitole pic.twitter.com/nIPAU05eTo 12.40pm BST The Swedish Academy of Sciences are collecting messages of congratulation to Jean Tirole, here. 12.37pm BST And that was the end of the press conference - Jean Tirole heads off to celebrate. 12.37pm BST Last question -- is this effectively a political choice, given that regulating Europes banking sector is such a hot topic today?The Academy give a cute answer -- it is not to a very large extent a political choice. 12.32pm BST The plaudits are coming in....Congratulations to Jean Tirole for winning the Nobel Prize for #Economics. 12.29pm BST Why Tirole, and why now?The Academy explains that the area of mergers, cartels, and monopoly regulation has become much more important since the 1980s, when government began to deregulate natural monopolies. 12.24pm BST And how can your work be used in banking sector, professor?Tirole cites the lessons of the financial crisis, which showed how counterparty risk fuelled the near meltdown of the banking system. 12.20pm BST Professor Tirole is asked how his work can be used to keep a web giant like Google in check.Tirole explains that his team have shown is that the antitrust economics of such markets, such as web search or credit/debit card supply, are different from other economies. 12.14pm BST Tirole is on the telephone line now -- saying that he is so moved by the award that he may not be able to answer questions. But hell try. 12.13pm BST The Royal Swedish Academy of Sciences says Tirole is one of the most influential economists of our time.One of our greatest living economists, who has made a huge contribution to economics.Many industries are dominated by a small number of large firms or a single monopoly. Left unregulated, such markets often produce socially undesirable results prices higher than those motivated by costs, or unproductive firms that survive by blocking the entry of new and more productive ones.From the mid-1980s and onwards, Jean Tirole has breathed new life into research on such market failures. His analysis of firms with market power provides a unified theory with a strong bearing on central policy questions: how should the government deal with mergers or cartels, and how should it regulate monopolies? 12.11pm BST Tirole, working with other economists, helped to analyse how regulators are hampered by asymmetric information -- ie, the big company has a better idea about whats happening in their market than the regulator themselves. 12.09pm BST Tirole, of Toulouse University, has received the award for his work on how to regulate large firms, the Academy explains.He has played a major role examining competition, and analysing how large firms should be regulated to prevent consumers being damaged by monopoly behaviour. 12.05pm BST And the winner is: Jean Tirole, the French economist, for his work on market power and regulation.He is being recognised for his work taming powerful firms. 12.02pm BST Staffan Normark, Permanent Secretary of the Royal Swedish Academy of Sciences, is announcing todays choice - in Swedish and then English..... 12.01pm BST Here we go...... 11.57am BST Youngest Nobel prize winner in economics was 51. Don't expect a #MalalaYousafzai today. 11.55am BST Just five minutes to go!Reminder, theres a live feed from Stockholm playing at the top of this blog (also streaming on YouTube here) 11.51am BST Twitter is buzzing with guesses too:Economics Nobel prize in 15mins, any guesses ? Stanford's Mark Granovetter is my guess for winner this year.Econ Nobel predictions http://t.co/pyR4taKOlL My econ Nobel prediction in two words: Ben Bernanke. 11.38am BST Tension is building in the Royal Swedish Academy of Science, in Stockholm, as the clock ticks towards noon BST.If you play the embedded video at the top of this page, you can hear the quiet chatter in the Session Hall. 11.29am BST And heres a fine chart from our Graphics department, showing the history of the Nobel Prizes in numbers: 11.19am BST Stockholm-based journalist Oliver Gee has crunched the numbers:What's 2 percent likely to be a woman, 67 years old, and 8 million kronor richer? The average Nobel Laureate for Economics. 11.02am BST The Nobel Prize team must have known wed have some dead air to fill before the winner is announced in an hours time, as theyve created a list of facts about previous winners.#NobelFacts 43 of the 74 Laureates in Economic Sciences (1969-2013) are born in USA, that is 58% pic.twitter.com/27HF0W3Sod 10.52am BST Fancy winning the Nobel prize for economics yourself? These are the areas that have found favour in previous years:TOP 10 FIELDS in Economic Sciences (1969-2013). One Laureate may be listed under several fields: pic.twitter.com/NzAbUC66Mk 10.41am BST Another option is Robert Barro of Harvard, who was recently ranked the third most influential economist in the world. Guy Bentley of City AM adds: He is one of the founders of the new classical economics and in 2011 delivered the Institute of Economic Affairs annual Hayek lecture on the economic crisis facing the governments of the developed world. 10.34am BST City AM also identify Israel Kirzner and William Baumol as possible winners: The 84 year old Israel Kirzner is certainly a dark horse. A follower of the Austrian school of economics, Kirzner received his PhD from New York University in 1957, where he studied under the classical liberal icon Ludwig von Mises. Kirzners research on entrepreneurship has criticised neoclassical perfect competition models and how coordination in the market emerges from discoordiantion.Baumol is recognised for a host of achievements in the discipline. In his 1968 paper Entrepreneurship in Economic Theory he said the firm without the entrepreneur is Hamlet without the prince. Furthermore, noted economist Tyler Cowen has tipped Baumol for the prize.2014 Nobel Prize in economics: Runners and riders http://t.co/S4EAjcezSE 10.32am BST Thomson Reuters has analysed academic citations to come up with a list of plausible winners.They include US academics Philippe M. Aghion and Peter W. Howitt for their work on Schumpeterian growth theory (the idea that creative destruction. helps to drive economies forward.) 10.27am BST As usual, theres a flurry of speculation over who might win this years award.And two British economists - Sir Anthony Atkinson and Angus Deaton - are in the mix, for their work on inequality, consumption and wellbeing.They are mentioned as possible winners because inequality is the subject du jour following publication of Thomas Pikettys hit book Capital earlier this year. Atkinson, a senior research fellow of Nuffield College, Oxford since 2005, has an inequality index named after him. His book Public Economics in an Age of Austerity, was published this year. 10.15am BST Youll be able to watch the announcement by clicking the embedded video at the top of this live blog.The announcement is due in a little under two hours -- theres a handy clock ticking down on the NobelPrize.org website... 10.12am BST Good morning. Before the complaints rush in, lets clear something up. Were not here to cover the Nobel Prize for Economics. That award doesnt technically exist.Instead, were about to discover who has won The 2014 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.The first falling leaf, the first pumpkin latte, the first complaint that economics isn't a real Nobel. The eternal rhythm of the seasons Continue reading...
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