Work on 'taming' firms wins Frenchman economics Nobel

Mon Oct 13, 2014 2:36pm EDT
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By Simon Johnson and Johanna Decorse

STOCKHOLM/TOULOUSE France (Reuters) - French economist Jean Tirole won the 2014 Nobel Prize for economics for work that has shed light on how governments can "tame" the big businesses that dominate once-public monopolies like railways, highways and telecommunications.

"This year's prize in economic sciences is about taming powerful firms," Staffan Normark, Permanent Secretary of the Royal Swedish Academy of Sciences, told a news conference after awarding the 8 million Swedish crown ($1.1 million) prize.

The academy said Tirole has clarified policies about regulating industries with a few powerful firms, especially after a wave of privatizations had set governments a conundrum over how to encourage private investments in sectors like healthcare and railways while reining in profits.

"My one merit is to have been with the right people at the right time," the 61-year-old, who is unknown to most French, told Reuters in his office at the Toulouse School of Economics in southwest France, where he is a professor.

It was the second Nobel Prize for a French national this year after author Patrick Modiano won the literature award - a fact not lost on Prime Minister Manuel Valls, trying to deflect attacks from France's EU partners over its battered public finances.

"After Patrick Modiano, another Frenchman in the firmament: congratulations to Jean Tirole! One in the eye for the French-bashers!" Valls tweeted on his official account.

Tirole himself was cautious on the economic prospects of his country, where unemployment is stuck at around 10 percent and whose leaders last month broke the latest in a series of promises to bring public lending to within EU limits.

"We need to modernize our country, leaving our children a legacy other than unemployment and public debt that they will have to pay off," he said.   Continued...

French economist Jean Tirole reacts as he speaks during a news conference at the Toulouse School of Economics in Toulouse October 13, 2014. REUTERS/Fred Lancelot