This paper introduces a mathematical framework for the study of resource allocation problems involving the deployment of heterogeneous agents to different teams. In this context, the term heterogeneous is used to describe classes of agents that differ in the basic functions they can perform (e.g., one type of agent searches for targets while another type engages those targets). The problem is addressed in terms of optimization using concepts from economic theory and the proposed algorithm was designed to ensure asymptotic stability of the optimal solution. (C) 2008 Elsevier Ltd. All rights reserved.