In case 1 unused land is available and mechanization leads to output growth-the more so, the higher the elasticity of final demand. The best example is the United States in the second half of the century: an impressive horse-based mechanization led to massive agricultural growth because land was rapidly opened up and export markets in Europe provided a highly elastic demand for agricultural products.

In addition, some (but not all) mechanization is subject to genuine economies of scale: it is technically more efficient to design a large rather than a small machine. Even machines invented in countries with abundant labor (and therefore smaller farms) were first developed for the largest farms, because they had the lowest costs of capital relative to labor.The market for machines expanded to smaller farms only when labor costs rose or capital became more abundant. In the history of engineering, technical developments have often been embodied in smaller and smaller machines.

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