Abstract

This paper reviews and interprets existing information and transaction costs theories of firm organization
and entrepreneur’s role in order to provide a consistent explanation of the farm-sector dynamics in
former communist countries. Important determinants of farm restructuring are economic factors, such
as relative productivity of existing human and physical capital in different organizations, risk, terms
of trade, transition specific distortions, and factor intensity of agricultural production. To a large extent,
however, the phenomenon of various new enterprises being established represents not just general
economic and policy conditions but also a diverse population of economic agents.