16 Pages

Residual value

Rent has played a role in classic economic theory for the past two centuries. Ricardo who is the founding father of rent theory, wrote his leading work in 1817, but although the industrial revolution was well underway by then, he and J. S. Mill and Marx who followed him saw rent in terms of agriculture. Classic theory sees rent as one of the great abstract nouns of economics, along with utility, labour, marginal output and many others. It does, however, produce two ideas relevant to location. One of these is the idea that values fall with distance from the city (considered in chapter 9) and the other concerns the concept of residual value.