The neoclassical theory of induced technological innovations, oioneered hy Hayami and Ruttan, has shown that changes in relative factor nrices heln explain the bias of technological change. We show in this paner that, when transactions costs on labor and land exist, structural and nolitical factors are additional important determinants of the bias of technology. The size of the research budget, average farm size, and inequality in the distribution of farm sizes are econometrically shown to all add to relative prices in exolaining the bias of technology. A larger research budget is, in narticular, observed to lead to a bias more congruent with democratic rules of public hudget allocation.