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सेमिनार: अंग्रेज़ी सीखने का अवसर (23 सितंबर: दोपहर 3 बजे)
Jean Tirole of France Wins Nobel in Economics
Oct 14, 2014

French economist Jean Tirole has won the Nobel Prize in economics for his work on market power and regulation. Regulators and competition authorities have obtained "a whole new set of tools" from Tirole's work. Before his work, governments and regulators often used simple rules such as capping prices for companies with a monopoly and banning co-operation between competitors. He showed that under some conditions, doing so can do more harm than good.

Many industries are dominated by a small number of large firms or a single. 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. The power of markets and the importance of strong and appropriate regulation has been a central issue in the management of national economies in recent years. 

This has been the case especially since the 1980s, when policies in advanced countries moved progressively to allowing markets a freer role, and privatised former state monopolies, with the aim of raising competition and reducing inflation. 

One of the chief contributions of 61-year-old Tirole is the insight that market dominance works differently in different industries. It noted that undercutting prices has traditionally been disciplined under competition, or anti-trust, law, because setting prices below production costs is one way of getting rid of competitors, but this is not necessarily true of all markets. 

Tirole's research has also showed that some companies—for example producers of widely used but patented software—are able to dominate not just their own industry, but also neighbouring industries further down the production chain. If the innovation is sold to only one firm, this firm makes a high profit because it becomes more efficient than its competitors. The producer can then set his price considerably higher. Tirole's work has provided a framework for designing policies for a number of industries, ranging from telecommunications to banking. 

The economics prize is the only Nobel not originally included in Nobel's last will and testament. It was established in 1968 by the Swedish central bank to celebrate its tricentenary, and first awarded in 1969. The other prizes have been awarded since 1901.

The prize will be awarded at a ceremony in Stockholm on December 10, the anniversary of the death in 1896 of the prizes' creator, Swedish scientist and philanthropist Alfred Nobel. 

The award of this year's prize to a French national marked a departure from American dominance on the list of laureates. Over the past decade, 18 out 20 economics prize laureates have been from the United States

The prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was set up in 1968. It was not one of the original awards set out in dynamite industrialist Alfred Nobel's 1895 will. 

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