Americans have dominated the Economics Nobel Prize, by winning 18 out of 20 times. 2014 winner Jean Tirole too is a Ph.D. from the MIT, US. Interestingly, his subject was searching for optimising sound regulations for minimising ill-effects of dominant industrial organizations. The vast scope for interaction of technology and globalisation has widened inequality. Entry barrier apart, the dominant monopolistic enterprises dictate prices and quantities. Perfect competition has long been forgotten. In the developed world, monopolistic organisations assume the role of ‘too big to fail’, as revealed by the financial crisis of 2008-09. Effective regulation of monopolies can prevent market failures. Government’s success lies in making big firms operate with reasonable profits and prices. The lesson: regulate right to derive benefits of big. Tirole had the answer.
Posted on: Fri, 17 Oct 2014 04:19:43 +0000
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