Abstract
This article constructs a model of technological choice in an economy where market exchanges in land and labour are prohibited. Empirical data on demand for tractors, tractor usage and chemical fertilisers in China are employed to test several hypotheses derived from the theoretical model. The theory implies that the impact of relative factor scarcity on the pattern of technological choice in such an economy is similar to that in a market economy as postulated by the Hicks‐Ruttan‐Hayami‐Binswanger hypothesis of induced technological change. The empirical evidence is found to be consistent with the implications of the model.

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