Reference no: EM131853086

Alchian and Demsetz (1972) define team productive activity as "that in which a union, or joint use, of inputs yields a larger output than the sum of the products of the separately used inputs." Managing team production (as with other production forms) requires an assessment of the marginal productivities of resources. The joint use of inputs lead(s) to which implication(s):

a. The nonseparability of the individual outputs of joint inputs raises the costs of assessing the marginal productivities of individual team members. b. The monitoring and metering of team member productivity, matching that productivity to costs, and reducing shirking can be achieved more economically across a market using bilateral negotiations or contracts than within a firm. c. Both a and b follow from the nature of team productive activity.