Russell Roberts has a gift for explaining the principles of economic thinking. In his essays, books, blogs, podcasts and radio interviews he engages with interesting anecdotes, parables and allegories that spark curiousity and instill the desire to learn more.
His most recent essay over at the Library of Eonomics and Liberty is about comparative advantage.
Comparative advantage is an essential mental model in MBM. Within the Decision Rights dimension, for example, we use it to guide discovery of those roles and responsibilities that allow us to create the most value.
You won't find a more capable guide as you explore this useful concept than Russ Roberts. I hope you enjoy the essay - leave a comment and let us know what you thought. (By the way - the essay promises to be part one of two.)
I found the essay to be a good simplistic example of demonstrating the comparitive advantage concept. It sounds a lot like the hedgehog concept I am currently reading about in Jim Collins book, "Good to Great". I admit though that I find myself getting bogged down with how to determine my comparitive advantage much less my employees/departments.
Posted by: Lee | 01 December 2006 at 08:47 AM
Some economists prefer the term "comparative costs." In, say, the case of team trying to decide who should do a particular task, we should be comparing each person's opportunity cost to do that task. The one who has to give up the LEAST to go to the task is the right choice.
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