Originally posted on Fangraphs  |  Last updated 10/18/11
With the season nearing its end (and my team out of the playoffs), I believe it is time to start thinking about the offseason, and more specifically; trades. Trading is something that has been deeply studied in economics and international finance and it may be informative to employ economic theory to baseball. The law of comparative advantage is one such theory, and I am going to try and apply it to baseball in away I haven’t yet seen.  Assumptions: 1) Teams try to maximize both the number of pitchers and hitters that they develop over a given time period. 2) Some teams do in fact have a comparative advantage over other teams in producing hitters or pitchers. 3) For simplicity, in the example all pitchers are of equal value and all hitters are of equal value. 4) There are no transaction costs Example: Lets focus on trade between two teams. One team, lets call them the Giants, are very good at developing pitchers, while another team, lets call them the Dodgers, are fairly mediocre at developing
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