Abstract
The dominance and persistency of family farms in industrialized nonsocialist countries can only be explained by the theory that farm households organize agricultural and household production, and also very often off-farm employment, efficiently. The organizational unity of farms and households in agriculture has to be seen as a consequence of limited economies of size relative to the size of the family's labor capacity. Economies of size are increasing as well as labor capacity due to labor saving technological innovations. Smaller than technically optimal farm sizes are further to be explained by lower transaction costs of family farms vis-a-vis hired labor farms. Future changes of these determinants and their implications for family farming are discussed. Copyright 1991 by Oxford University Press.
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