Abstract
This study attempts to explain why farm structure in Finland is what it is. The static aspects of size distribution are summarised by means of log-normal distribution and tested with respect to data on more than 500 communes for years 1959 and 1969. As to the dynamic aspects, despite some correlation between percentage growth and size at the beginning of the time period and which is believed to be partly spurious, the observed phenomena do not seem to be incompatible with the proposed version of law of proportionate effect. The latter need not be observed at every point in time.
Highlights
Studies of farm size distribution seem to be few presumably because it does not make sense to study »business concentration» in an industry characterized by many entrepreneurs operating under a relatively competitive market structure
Granted that the Penrose effect is a force to be reckoned with, it would tend to nullify the desire to improve the economics of scale so that we are likely to observe over a ’sufficiently’ long period of time that the probability of a given proportionate change in size during this time interval is the same for all farms regardless of their size at the beginning of the period
Summing up it can be stated that the observed phenomena do not seem to be incompatible with the particular interpretation of the law of proportionate effect advanced here
Summary
Studies of farm size distribution seem to be few presumably because it does not make sense to study »business concentration» in an industry characterized by many entrepreneurs operating under a relatively competitive market structure. A basic understanding of the process of farm growth is necessary if we do not want to formulate production functions on a purely ad hoc basis. This is a sufficient justification of the present study which attempts to explain why the farm structure in Finland is what it is but even more important, why it changes the way it does. The theoretical framework of the study presents no difficulty because »much of the discussion pertaining to the size of the firm is applicable to the size of the plant» More closely related to technology since the basic unit is the plant rather than the firm (Shen 1965, p. 422)
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