Differential Rent Theory

Discipline: Economics

Raised as an issue by Scottish economist JAMES ANDERSON (1739-1808) and English economist David Ricardo (1772-1823), differential rent theory asserts that rent arises because of the differences in the fertility or location of agricultural land.

No rent is paid on the worst land and the total amount of rent increases as the margin of cultivation is extended.

Source:
D Ricardo, On the Principles of Political Economy and Taxation (London, 1817)

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