Dr. Jean Tirole is the winner of the 2014 prize for economics, he is also a powerful supporter of a global agreement to reign in emissions. What makes his support for climate change mitigation so important is the fact that he has such a profound understanding of both the behavior of markets and regulation. Both of which are central to a global emissions reduction scheme.
While some of Tirole’s research has focused on climate change, his Nobel Memorial Prize in Economic Sciences was awarded for his analysis of market power and regulation in natural monopolies and oligopoly.
The 61 year old French professor of economics focuses on industrial organization, game theory, banking and finance, economics and psychology. In 2001 he calculated the optimal prices for the regulation of natural monopolies and wrote a number of articles about the regulation of capital markets.
The fact that someone with the intellectual insight and experience of Dr. Tirole strongly advocates for an immediate and binding international agreement to limit greenhouse gas emissions is important. His support is premised on a lifetime of understanding market dynamics and regulation. Along with many others, Tirole argues that it will be more costly and difficult to reign in emissions the longer we wait.
Tirole directly challenges the pillar of conservatism that suggest markets work best when left alone. He has shown how markets can both fail and be inefficient. He therefore suggests that both policy and regulation must pay heed to these facts.
Tirole reiterates something Sir Nicholas Stern said in 2006, “Climate change is the greatest market failure the world has ever seen.”