Team Production and the Allocation of Creativity across Global and Local Sectors

This paper introduces team production into a two-sector Ricardian comparative advantage model having two types of agents, high-skilled and low-skilled, each with comparative advantage in one of the two sectors under self-production. A team is an organization in which one high-skilled agent manages low-skilled workers, allowing the latter to use their manager's knowledge, and thus resulting in a more efficient outcome than self-production. This paper conducts a comparative statics analysis to understand how the allocation of the high-skilled agents in a sector in which they do not have comparative advantage under self-production is affected by team production in that sector. The analysis provides two implications: First, team production changes the nature of comparative advantage, possibly leading to reallocation of the high-skilled agents from the sector for which they initially have comparative advantage to the other sector where the environment of team production improves. Second, the likelihood of shift is limited, and, in the case of shift, non-monotonic dynamics are likely to occur; namely, if a shift occurs, then redispersion follows.