Economics for the Common Good

"Jean Tirole wrote this book after he won his Nobel Prize in 2014 because, he said, people kept coming up to him and saying, ‘ Tell us what it’s all about!’ For the first time, he felt that he ought to write a book that was accessible to people who wanted to learn from him. His own specialty is industrial organisation in either regulated markets (like electricity) or digital markets (like the digital platforms). But the book ranges much more widely than that. The first half of the book is about what economists do, the state of the subject, what kinds of things we do know about and what kinds of things we need to be cautious in claiming anything about. It describes how you do economic research and how he’s done his own research; the sort of structures—so that people can get a bit of an understanding about how reward systems in universities work and therefore why people do the kind of research they do. The second half of the book is topics. He discusses everything from the Euro crisis, climate change and environmental economics to the issues close to his own heart like how you regulate better and how the electricity market works. Yes, it would be. It would be very good for students. It’s a book that you can dip into as well. In fact, he recommends that because it’s quite a dense book to just read through from beginning to end. It is quite long and I’ve read it in chunks as well, so I think that’s probably the best way to do it—to read the first half properly as a book and then to dip into the topics in the second half as they interest you or in different segments. That’s right, anything to do with market structures and how markets operate and, in particular, the kinds of markets where it’s very difficult to get competition working effectively. That includes things like the natural monopolies and it also includes these new digital markets, where there are such big economies of scale that it’s very difficult to have many different competitors. So, if you think about it, we’ve got one Google search. We’ve got one Amazon that dominates online retail. We’ve got one social media company, Facebook, that’s incredibly dominant. The book reminds me of one of my all time favourite books in economics, which is Reinventing the Bazaar by John McMillan, which I think I’ve recommended to you in the past. Nobody has cast iron solutions for these digital markets yet. It’s an area of very active research in competition economics. But he’s got some thoughts about it. When it comes to the more familiar kinds of markets, he’s worked very closely with policy makers, with the French authorities, to come up with practical solutions."