ABSTRACT
The actual process of competition for the use of land is more complicated than is suggested in the last paragraph and in order to analyse the matter Johann Heinrich Von Thunen introduced the concept of Economic Rent, a concept which had been propounded by D. Ricardo. Von Thunen observed that Ricardo based his argument about the nature of Economic Rent on differences in the inherent fertility of the soil, but that exactly the same phenomenon arises if the ‘quality’ of the soil varies not with respect to fertility but with respect to location. In order to develop the ideas, von Thunen conceived the idea of a state which had no trade connections with any other nation and was therefore surrounded by an uncultivated wilderness. Economic Rent also arises with respect to the intensive margin of land use, and also with respect to additional doses of labour on the same piece of land.
