The presence of transactions costs may mean, for example, that the cost of credit decreases as farm size increases, that labor costs per hectare increase as farm size increases (because of supervision costs), and the cost of land transactions declines as farm size increases. Therefore, as farm size grows, labor use per hectare may decline while machinery use per hectare and the demand for capital-intensive technologies may increase. Owners of large farms also maybe quicker to adopt
new technologies, because they have fewer credit constraints affecting input purchases.