In the land reform literature an important issue has been the effect land redistribution has on the allocation of resources and agricultural productivity. Generally, monopolistic behaviour of plantation owners with respect to land has prevailed since control of the land has generated monopsonistic power with respect to labour. This behaviour would result in a lesser degree of land utilization by large land owners and a lower value of marginal product for labour on small farms than on large farms. The rural labour force is effectively left with no options for employment other than the plantation sector. The monopolization of land causes a higher land/labour ratio for large operations than for small farmers. In a competitive market with tillable land held constant, the value of marginal product for labour for the two farm classes would be equal. Further, monopsony theory reveals that output and employment would be lower than in a competitive market.
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