Jean Tirole’s research while affiliated with Université Libre de Bruxelles and other places

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Publications (393)


Competition and industrial policy in the 21st century
  • Article

July 2024

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192 Reads

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1 Citation

Oxford Open Economics

Jean Tirole

Large fixed costs and (direct and indirect) network externalities generate barriers to entry and high markups for winners in the digital industry. The potential for high prices, low innovation and abuses of dominant position as well as the contribution to rising inequality raise the question of how countries should regulate the industry. The tech giants’ dominance does not confront us with an unpalatable choice between laissez-faire and populist interventions. The commentary explains economic stakes, considers desirable adaptations of regulation in the digital age and draws some conclusions for policy reform.


Too Domestic to Fail Liquidity Provision and National Champions

March 2024

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4 Reads

Review of Economic Studies

Authorities’ support policies shape the location and continuation of industrial and banking activity on their soil. Firms’ locus of activity depends on their prospect of receiving financial assistance in distress and therefore on factors such as countries’ relative resilience. We predict that global firms are global in life and national in death; and that they become less global when competition is more intense, times are turbulent, and international risk sharing (say, through swap lines) weak. We analyze the competitive benefits of industrial and banking policies as well as their limitations, such as currency appreciation.



Competition and the Industrial Challenge for the Digital Age

September 2023

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28 Reads

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42 Citations

Annual Review of Economics

Tech giants' dominance does not confront us with an unpalatable choice between laissez-faire and populist interventions. This article takes stock of available knowledge, considers desirable adaptations of regulation in the digital age, and draws some conclusions for policy reform.


The Portfolio of Economic Policies Needed to Fight Climate Change

July 2023

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59 Reads

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37 Citations

Annual Review of Economics

Climate change poses an existential threat. Theoretical and empirical research suggest that carbon pricing and green R&D support are the right tools, but their implementation can be improved. Other policies, such as standards, bans, and targeted subsidies, also all have a role to play, but they have often been incoherent, and their implementation is delicate. Expected final online publication date for the Annual Review of Economics, Volume 15 is August 2023. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.


Figure 1: (cumulative distribution function G(m; ρ) for non-directed search)
Knowing your Lemon before you Dump It
  • Preprint
  • File available

February 2023

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227 Reads

In many games of interest (e.g., trade, entry, leadership, warfare, and partnership environments), one player (the leader) covertly acquires information about the state of Nature before choosing whether to engage with another player (the follower). The friendliness of the follower’s reaction depends on his beliefs about what motivated the leader’s choice to engage. We provide necessary and sufficient conditions for the leader’s value of acquiring more information to increase with the follower’s expectations. We then derive the economic implications of this characterization, focusing on three closely related topics (cognitive traps, disclosure, and cognitive styles), drawing policy implications.

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Figure 1: joint surplus
Figure 2: timing
Figure 3: Buyer-seller game in the absence of ex-post renegotiation
Figure 5: Timing in the exogenous-information shrouded-attributes model
Exposure to the Unexpected, Duty of Disclosure, and Contract Design *

January 2022

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47 Reads

We introduce the concept of "relative exposure to the unexpected" and show that, when parties to a contract covertly engage in information acquisition prior to designing the contract, the concept underlies a variety of phenomena such as expectation conformity (the parties' tendency to conform to the level of cognition that is expected of them), over-cognition, and the desirability of mandatory disclosure laws. The paper develops a simple framework that captures the above phenomena in a unified manner and sheds light on a few policy implications.



Expectation Conformity in Strategic Cognition

August 2021

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236 Reads

The paper studies "cognitive games," that is, games in which the players can influence their understanding of a strategic situation before playing the primitive (normal-or extensive-form) game. The analysis covers both the case of self-directed cognition (as when a player controls her own information structure) and the case of manipulative cognition (as when a player influences her opponents' understanding of the game). We introduce the concept of expectation conformity and show how the latter, together with its decomposition into unilateral expectation conformity and increasing differences, sheds light on the choice of the cognitive structures (both on and off the equilibrium path) and on the sensitivity of the cognitive postures to the type of strategic interaction (e.g., complements vs substitutes). We show that constant-sum games never give rise to self-fulfilling cognition. By contrast, the latter emerges in many non-constant-sum games, both when cognition is self-directed and takes the form of "sparsity," noisy information acquisition, or "espionage," (i.e., learning about others' beliefs), as well as when cognition is manipulative and takes the form of framing, signal jamming, noisy disclosures, and counter-intelligence. Finally, we discuss the role that expectation conformity plays in games with boundedly-rational players such as those considered in the level-k literature.


Citations (74)


... The available forms of business enterprise interaction developed historically, starting with concerns and family-owned business groups at the beginning of the 20th century [1][2][3] and developing forward to the strategic alliances of the late 20th century [4,5]. The companies always attempted to resolve their most important, existential question: how does one find the balance between staying competitive and at the same time keeping one's economic independence [6,7]? Is it feasible for a medium-sized industrial company to cooperate with large players without the risk of becoming an acquisition target [8,9]? ...

Reference:

Network Integration as a Tool for Sustainable Business Development
Competition and industrial policy in the 21st century
  • Citing Article
  • July 2024

Oxford Open Economics

... As a result, the only viable approach to tackling the climate disaster is for countries to reduce the costs and amounts of carbon they emit. Nations must come together to develop a legally enforceable agreement that distributes national revenues to worldwide carbon emissions (Gollier and Tirole, 2017). ...

Effective Institutions against Climate Change
  • Citing Chapter
  • June 2017

... In this paper, we investigate "mitigation strategies", i.e., the mix or ensemble of the varied mitigation policies countries have adopted and implemented to reduce emissions. There is a growing international consensus that well-designed mitigation strategies need to span a variety of policies tailored to country specific circumstances 9,10 . However, the extant literature on climate policy evaluations primarily evaluates single policies (for reviews, see refs. ...

The Portfolio of Economic Policies Needed to Fight Climate Change
  • Citing Article
  • July 2023

Annual Review of Economics

... Such an institution has been given various names, e.g. carbon central bank or independent carbon board [25], [26]. This is one way to establish a mechanism providing forward guidance on carbon prices-which in turn is an important step forward to de-risking low carbon investments. ...

The portfolio of economic policies needed to fight climate change
  • Citing Article
  • January 2022

SSRN Electronic Journal

... The second theory pertinent to this study is agency theory, which proposes that managers may overinvest in projects to serve their interests and improve their reputation (B enabou and Tirole, 2009). As a result, whether or not a firm invests in a CSR strategy becomes a source of conflict among managers, shareholders and the firm's larger stakeholders (Pareek and Sahu, 2021). ...

Individual and Corporate Social Responsibility
  • Citing Article
  • January 2009

SSRN Electronic Journal

... Although some instances of data withholding are nefarious (e.g., a scientist omitting disconfirmatory evidence from their report), attention and other constraints mean that informational persuasion is a normalized feature of many interactions (e.g., "please submit no more than three letters of recommendation"). The use of models (narratives, stories, etc.) to characterize publicly available information is a frequent practice among lawyers, politicians, academics, and other professional persuaders, as has been documented extensively elsewhere (Shiller, 2017;Spiegler, 2016;Eliaz and Spiegler, 2020;Roos and Reccius, 2021;Andre et al., 2023;Bénabou et al., 2018;Graeber et al., 2024). Informational persuasion is iso-morphic to the following problem, which asks whether a model can be used to "frame" public information (see, e.g., Schwartzstein and Sunderam, 2021). ...

Narratives, Imperatives, and Moral Reasoning
  • Citing Article
  • January 2018

SSRN Electronic Journal

... While this approach has its merits, the BE framework allows a shift in focus toward the actors that are subject to regulation. This choice results from the recognition that while legal mechanisms function by setting up an obligation or a prohibition backed by systems of sanctions (Cooter, 1998), a gap exists between the idealization and operationalization of these instruments, and the action of those subject to regulation is an important reason for this gap (Bénabou & Tirole, 2012). Foresight is an immediate problem, as policymakers have limited ability to anticipate and prevent people and firms from finding ways to comply with the letter of the law while deviating from its spirit. ...

Laws and Norms
  • Citing Article
  • January 2012

SSRN Electronic Journal

... However, much of this revival has concentrated on medieval times (e.g. Chaney 2013;Kuran 2012;Pamuk and Shatzmiller 2014;Saleh 2018;Saleh and Tirole 2021;Shatzmiller 2001) and the colonial period (e.g. Artunç 2015; Artunç and Guinnane 2019; Panza and Williamson 2015;Saleh 2015;Salem and Seck 2022). ...

Taxing Identity: Theory and Evidence From Early Islam

Econometrica

... Moreover, while it holds true that shadow banking can augment the economy's funding, it does so without recourse to public backstops, relying on excessive leverage and a highly susceptible funding base (Farhi and Tirole, 2021). Regulatory initiatives in the aftermath of the Global Financial Crisis of 2007-2009 have primarily targeted traditional banks. ...

Shadow Banking and the Four Pillars of Traditional Financial Intermediation
  • Citing Article
  • October 2020

Review of Economic Studies