Johann Heinrich von Thünen Johann Heinrich von Thünen ( 24 June 1783 - 22 September 1850 ) `` ranks alongside Marx as the greatest economist of the nineteeth century '' ( Fernand Braudel ) . Von Thünen was a Mecklenburg ( north German ) landowner , who in the first volume of his treatise , The Isolated State ( 1826 ) , developed the first serious treatment of spatial economics , connecting it with the theory of rent . The importance lies less in the pattern of land use predicted than in its analytical approach . Johann Heinrich von Thünen Von Thünen developed the basics of the theory of marginal productivity in a mathematically rigorous way , summarizing it in the formula R=Y ( p-c ) -YFm , where R=land rent ; Y=yield per unit of land ; c=production expenses per unit of land ; p=market price per unit of commodity ; F=freight rate ; m=distance to market . The Von Thünen model of agricultural land , created before industrialization , made the following simplifying assumptions : The city is located centrally within an `` Isolated State '' . The Isolated State is surrounded by wilderness . The land is completely flat and has no rivers or mountains . Soil quality and climate are consistent . Farmers in the Isolated State transport their own goods to market via oxcart , across land , directly to the central city . There are no roads . Farmers behave rationally to maximize profits . The use a piece of land is put to is a function of the cost of transport to market and the land rent a farmer can afford to pay ( determined by yield , which is held constant here ) . The model generated four concentric rings of agricultural activity . Dairying and intensive farming closest to the city . Since vegetables , fruit , milk and other dairy products must get to market quickly , they would be produced close to the city . Timber and firewood would be produced for fuel and building materials in the second ring . Wood was a very important fuel for heating and cooking and is very heavy and difficult to transport so it is located as close to the city . The third zone consists of extensive fields crops such as grain . Since grains last longer than dairy products and are much lighter than fuel , reducing transport costs , they can be located further from the city . Ranching is located in the final ring . Animals can be raised far from the city because they are self-transporting . Animals can walk to the central city for sale or for butchering . Beyond the fourth ring lies the wilderness , which is too great a distance from the central city for any type of agricultural product . Von Thünen 's rings proved especially useful to economic history , such as Fernand Braudel 's Civilization and Capitalism , untangling the economic history of Europe and European colonialism before the Industrial Revolution blurred the patterns on the ground . In economics , von Thünen rent is an economic rent created by spatial variation or location of a resource . It is 'that which can be earned above that which can be earned at the margin of production' . Model of agricultural land use : The Thünen rings Thünen 's model : the black dot represents a city ; 1 ( white ) dairy and market gardening ; 2 ( green ) forest for fuel ; 3 ( yellow ) grains and field crops ; 4 ( red ) ranching ; the outer , dark green area represents wilderness where agriculture is not profitable In his theory of `` The Isolated State `` , he started out from Adam Smith 's idea of `` economic man `` : that the farmer is expected to maximize his profit ( `` economic rent `` ) from his farmland . Von Thünen , as a landlord , knew that such returns depends on an optimal use of the land surfaces and the transport costs . In concentrating on the effects of these two variables on profits , removal of other factors results in a homogeneous - and isolated - state : A circular , completely undilating plane without international relationships with a single , dominant market in the center . Grain is the only agricultural product with a fixed market price . The economy in the surrounding rural area would have to rearrange itself according to economic behavior in such a way that each industry brings optimal profit in : Transport cost is directly proportional to the distance from the market and the weight of the produce . The gain from farming per unit area ( locational rent ) decreases with increasing distance from the market . The minimum price of a commodity is calculated by locational rent , transport costs and fixed production costs - the profit is then the difference between the costs and the fixed market price . Idealized pattern of agricultural land use zones in von Thünen 's model Locational rent , a term used by von Thünen in his argument , is to be understood as the equivalent to land value . It corresponds to the maximum amount a farmer could pay for using the land , without making losses . It can be defined as the equation below : L = Y ( P - C ) - Y D F is ... * L : Locational rent ( in DM / km^2 ) * Y : Yield ( in t/km^2 ) * P : Market price of the crop ( in DM/t ) * C : Production cost of the crop ( in DM/t ) * D : Distance from the market ( in km ) * F : Transport cost ( in DM/t/km ) Take the locational rent of a product with a yield of 1 , 000 t/km^2 , for example , with a fixed price of 100 DM/t in the market . Production and transport costs are respectively , 50 DM/t and 1 DM/t/km . The locational rent is 50 , 000 DM/km^ ( 2 ) at the market , 40 , 000 DM/km^ ( 2 ) 10 km from the market and only 20 , 000 DM/km^ ( 2 ) 30 km from the market . Since locational rent falls with increasing distance from the market , the amount each farmer is willing to pay for agricultural land will shrink and the price of land will eventually decline . Von Thünen concluded that the cultivation of a crop is only worthwhile within certain distances from the city : beyond that , either the cost of the land becomes too high , with increasing distances transport costs also increase , or , if there is another product having greater yield or lower transport costs . After a distance from the market ( the city ) the production of a crop becomes unprofitable , either because its profits drop to zero or the profits earned by other crops are higher , as von Thünen calculated them for products having different intesities ( cattle , wood , grain , eggs , milk , etc. ) : For each product there is a certain distance from the city where its production would be worthwhile . Since Thünen referred transport costs directly to the market ( `` Luftlinie '' ) , circular land use zones arises - the Thünen rings . Representation of the locational rent relationship between two agricultural goods The farmers of these products compete against each other , plant their crops concentrically around the market according to the locational rent curves of their own crops . Products having low yields with high price and high transport costs relative to its weight or distance due to its weight , will have higher locational rent close to the market than a product having lower transport costs . Locatinal rent is the highest possible amount one will pay for the use of the land for a certain cultivation , and is a relative indicator of competitiveness of it in the market. [ work on ] Application and criticism Like many other models in geography , von Thünen 's model was criticized frequently due to its restrictive nature . The basic conditions of the model , however , could be approximated by slight modifications of the respective reality . The circular pattern , which can be attributed to only one market and excluding transport costs gradients running from the centre , is for example only one of many conceivable geometrical starting situations . If other natural landscapes or transportation routes are present , the land use zones would be stripe-formed . If several markets were present , groups of zones would be formed around each market . A justified objection against it is the reference to the absence of any productive profit . In von Thünen 's theory different agricultural uses compete for the optimal location , which results from the product-specific supply/expenditure relation . The competitive power becomes indirectly measurable over locatinal rent . After deducting production costs and location-specific transport costs , however , nothing more remains of the market profits . The von Thuenen model leads to the idea of complete self-sufficiency among farmers . Thünen 's idea of `` economic rent '' attempted - while ignoring other characteristics - to explain the use of zones controlled solely by economically rational perception . Possible consumers plays , finally , the crucial role for the choice of location . At the same time evaluation of all potential locations is released , which leads to a zoning of the possible offers . This simply developed space restaurant model reacts however sensitively to changes of the space overcoming costs . It possesses however due to its universality nevertheless a high value within geographical questions and methodology . See also Ricardian rent Hotelling rent External links Online resources concerning von Thünen CEPA page on von Thünen Categories : 1783 births | 1850 deaths | Economists | Classical economists | Economic geographers | German geographers In other languages : Česky | Deutsch | Français | 日本語 | Русский | Svenska 