A French economist who has been working since the 1980s on ways to curb the dominance of major companies has won the Nobel prize for economics.

Praising Jean Tirole’s attempts to “tame powerful firms”, the committee awarding the 8m kronor (£750,000) prize said the University of Toulouse professor was “one of the most influential economists of our time”. The committee chose an area of economics that has become increasingly important as governments have privatised former public monopolies such as water, electricity and telecoms and Tirole’s work has been adopted by competition regulators around the world.

Tirole, 61, has covered a wide range of areas including pay, the banking industry and credit card fees. In a paper last year he scrutinised, with Roland Bénabou, a “bonus culture that takes over the workplace, generating distorted decisions and significant efficiency losses, particularly in the long run”.

BREAKING NEWS: #nobelprize2014 in Economic Sciences to French Jean Tirole @UT1Capitole pic.twitter.com/nIPAU05eTo — The Nobel Prize (@NobelPrize) October 13, 2014

He is known for his collaboration with the late Jean-Jacques Laffont. After winning the award, Tirole described Laffont, who died 10 years ago, as “my mentor and dear friend” and said his former colleague “probably would have deserved to be with me today in this prize for regulation and competition policy”.

The judges said: “[Tirole] has made important theoretical research contributions in a number of areas, but most of all he has clarified how to understand and regulate industries with a few powerful firms.” The panel said Tirole had shown the “deep and essential differences” between regulating companies in different sectors, such as telecoms companies or banks. Imposing caps on prices could reduce the influence of monopolies in some sectors, but not in others, the judges said, pointing to Tirole’s use of game theory and contract theory to develop competition analysis.

Announcing the winner, Staffan Normark, permanent secretary of the Royal Swedish Academy of Sciences, said: “This year’s prize in economic sciences is about taming powerful firms”.

Joaquín Almunia, the EU commissioner in charge of competition policy, said Tirole’s work “has been central to the economic analysis underpinning many of our instruments in competition policy and beyond”. The economics award is technically in the name of the Swedish central bank in the memory of Alfred Nobel, as the field was not stipulated as one of the five areas for awards by the Swedish inventor of dynamite, who set up the Nobel prizes in his will.

After receiving the award, Tirole took questions on topics including Google and the banking sector, welcoming attempts to create a banking union in the eurozone but acknowledging banking was hard to regulate. He said: “Banking is a very hard thing to regulate and we economists, academics, have to do more work on this.”

Tirole said he felt proud but added: “It’s also being with the right people, in the right place, at the right moment. And, you know, it’s team work too.” He told his 90-year-old mother, who used to teach French, Latin and Greek, to sit down before telling her the news.

Economists said his selection was not controversial. “Most people thought he’d get it at some point,” said Mark Armstrong, professor at All Souls College, Oxford. Armstrong described Tirole as “a theorist, but someone who’s very much interested in real-world problems”.

Referring to Tirole’s work with Laffont, Armstrong said: “While much regulation of monopolies used simple schemes such as rate of return regulation and price cap regulation, their contribution was to show how to move beyond these to forms of regulation which were more sensitive to the details of the market, including the scope to introduce competition into monopoly markets.”

Oxford University economics professor Paul Klemperer told Reuters: “He has been the dominant figure in industrial organisation. It was not a question of whether but when he would be awarded the prize. “It has given us understanding of how to think about regulating firms, that there is not one size fits all.”

However, David Blanchflower of Dartmouth Colleague in the US tweeted “about time the Nobel (economics) committee started to award prizes to people who discover empirical facts about how the world works”.

Tirole is the second Frenchman to win a Nobel prize this year – Patrick Modiano won the literature award – which prompted Manuel Valls, the French prime minister, to tweet: “After Patrick Modiano, another Frenchman in the stars: congratulations to Jean Tirole. It makes a mockery of French-bashing”.

It is 25 years since a French economist last received the award, which was first handed out in 1969. It has been won by 74 individuals, some of whom have become familiar names, such as Joseph Stiglitz – with whom Tirole has worked in the past – James Tobin and Milton Friedman.

Only one woman has ever won, Elinor Ostrom, in 2009. The last French economist to win was Maurice Allais.

Last year, the prize went to three economists, Eugene Fama, Lars Hansen and Robert Shiller for their work on predictions in financial markets.