Design World

  • Home
  • Technologies
    • 3D CAD
    • Electronics • electrical
    • Fastening & Joining
    • Factory automation
    • Linear Motion
    • Motion Control
    • Test & Measurement
    • Sensors
    • Fluid power
  • Learn
    • Ebooks / Tech Tips
    • Engineering Week
    • Future of Design Engineering
    • MC² Motion Control Classrooms
    • Podcasts
    • Videos
    • Webinars
  • LEAP AWARDS
  • Leadership
    • 2022 Voting
    • 2021 Winners
  • Design Guide Library
  • Resources
    • 3D Cad Models
      • PARTsolutions
      • TraceParts
    • Digital Issues
      • Design World
      • EE World
    • Women in Engineering
  • Supplier Listings

Nobel winner: cable could have been cheaper in the U.S., but…

By The Associated Press | October 14, 2014

Share

U.S. consumers might be paying less than they are for cable and Internet access if regulators had followed the guidance of Jean Tirole in promoting industry competition.

So say experts in assessing the work of Tirole, a 61-year-old Frenchmen who won the Nobel prize in economics Monday for showing how to encourage better products and competitive prices in industries dominated by a few companies.

“He has given us an instruction manual for what tool to use in what market,” said Torsten Persson of the prize committee. “Politicians would be stupid not to take his policy advice.”

They haven’t always listened.

Joshua Gans, management professor at the University of Toronto, says U.S. regulators didn’t follow Tirole’s advice to require cable and phone companies to sell competitors access to “the last mile” of cable connecting homes to telecommunications networks. Instead, giants such as Comcast and Time Warner now control the last mile.

To reach a home, a potential competitor must pay to install its own cable. That limits competition and allows existing telecom providers to charge more. As a result, Gans says, American consumers pay too much for cable TV and Internet access.

Tirole, a professor at the Toulouse School of Economics in France who earned a doctorate from Massachusetts Institute of Technology, is the third Frenchman to win the $1.1 million Nobel Memorial Prize in Economic Sciences, which has been dominated of late by U.S. economists. This is the first year since 1999 that an American has not been among the winners.

“I was incredibly surprised at the honor, and it took me half an hour to recoup” from the Nobel committee’s call, Tirole said in an interview with the website Nobelprize.org.

Tirole did much of his work with his Toulouse School colleague Jean-Jacques Laffont, who died in 2004. Had he lived, Laffont “would have certainly shared” the prize with Tirole, says David Warsh, who follows academic economists on his Economic Principals blog.

Tirole cannot be easily categorized as pro- or anti-regulation. He agrees with free-market advocates that “because firms know more than regulators, regulation is necessarily going to be imperfect,” said Eric Maskin, a Harvard University economist who taught Tirole at MIT and who won a Nobel prize himself in 2007. “But that doesn’t mean there shouldn’t be regulation. You have to be very careful so you don’t do more harm than good.”

At a news conference Monday, Tirole said, “The market needs a strong state to function normally.”

Left unregulated, companies with few competitors can stop innovating and charge unnecessarily high prices. But attempts to regulate them often fail. Companies typically grow close to the government agencies that are supposed to supervise them and find ways to exploit regulations to block competitors.

Studying specific industries, including telecommunications and finance, Tirole devised rules meant to align companies’ interests with those of consumers, thereby nudging producers to provide better products and lower prices.

Tirole is the second French economist to make headlines this year. Thomas Piketty gained global fame with his best-seller, “Capital in the 21st Century,” in which he used 300 years of data to document a widening gap between rich and poor. Piketty’s book was based on research he conducted with his countryman Emmanuel Saez.

This year’s economics prize was the second Nobel to be won by Frenchmen this year, after the literature prize awarded last week to Patrick Modiano.

“After Patrick Modiano, another Frenchman in the firmament. Congratulations to Jean Tirole. A thumb in the eye for french bashing,” French Prime Minister Manuel Valls tweeted.

The announcement also set off celebrations across the Atlantic at MIT, where Tirole earned his doctorate in 1981 and is still a visiting professor who typically comes to campus three times a year.

“I’m thrilled for Jean,” said Nancy Rose, an MIT professor who has known Tirole for more than three decades. “This is a prize I think we were confident would come.”

“He’s extremely generous. He’s unselfish,” added MIT economist Bengt Holmstrom. “He’s always looking at ways to better government.”

Monday’s prize completes the 2014 Nobel Prize announcements. The Nobel prizes for peace, literature, chemistry, physics and medicine were awarded last week.

The awards will be presented on Dec. 10, the anniversary of prize founder Alfred Nobel’s death in 1896.

Though the economics award isn’t an original Nobel — it was added in 1968 by Sweden’s central bank — it is presented with the others and carries the same prize money.

___

Wiseman reported from Washington, Ritter from Stockholm. Nathalie Rothschild in Stockholm, Lori Hinnant in Paris and Mark Pratt in Boston contributed to this report.


Filed Under: Industry regulations, Cables + cable management

 

Related Articles Read More >

ids-industrial-camera-manufacturer.sustainability-3
IDS focuses on sustainability in shipping
Part 5: Motion control + MQTT, OPC-UA, and other protocols for cloud services
Facebook CEO Zuckerberg Calls for More Outside Regulation
Musk’s Boring Company Calls it Quits on LA Tunnel, Instead Focuses on Hyperloop

DESIGN GUIDE LIBRARY

“motion

Enews Sign Up

Motion Control Classroom

Design World Digital Edition

cover

Browse the most current issue of Design World and back issues in an easy to use high quality format. Clip, share and download with the leading design engineering magazine today.

EDABoard the Forum for Electronics

Top global problem solving EE forum covering Microcontrollers, DSP, Networking, Analog and Digital Design, RF, Power Electronics, PCB Routing and much more

EDABoard: Forum for electronics

Sponsored Content

  • Global supply needs drive increased manufacturing footprint development
  • How to Increase Rotational Capacity for a Retaining Ring
  • Cordis high resolution electronic proportional pressure controls
  • WAGO’s custom designed interface wiring system making industrial applications easier
  • 10 Reasons to Specify Valve Manifolds
  • Case study: How a 3D-printed tool saved thousands of hours and dollars

Design World Podcasts

April 11, 2022
Going small with 3D printing
See More >
Engineering Exchange

The Engineering Exchange is a global educational networking community for engineers.

Connect, share, and learn today »

Design World
  • Advertising
  • About us
  • Contact
  • Manage your Design World Subscription
  • Subscribe
  • Design World Digital Network
  • Engineering White Papers
  • LEAP AWARDS

Copyright © 2022 WTWH Media LLC. All Rights Reserved. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of WTWH Media
Privacy Policy | Advertising | About Us

Search Design World

  • Home
  • Technologies
    • 3D CAD
    • Electronics • electrical
    • Fastening & Joining
    • Factory automation
    • Linear Motion
    • Motion Control
    • Test & Measurement
    • Sensors
    • Fluid power
  • Learn
    • Ebooks / Tech Tips
    • Engineering Week
    • Future of Design Engineering
    • MC² Motion Control Classrooms
    • Podcasts
    • Videos
    • Webinars
  • LEAP AWARDS
  • Leadership
    • 2022 Voting
    • 2021 Winners
  • Design Guide Library
  • Resources
    • 3D Cad Models
      • PARTsolutions
      • TraceParts
    • Digital Issues
      • Design World
      • EE World
    • Women in Engineering
  • Supplier Listings