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Von Thünen’s Agriculture

Location Theory

• He contributed highly significant concepts and techniques to economic theory like his first volume of his treatise “Isolated State” in 1826 which has the same fundamental principles as that of Ricardo. a prominent 19th century economist and a native of Mecklenburg-Strelitz in northern Germany. • von Thunen’s Model of Agricultural Land Use -Cost of land vs. • Sometimes mentioned to as a “Father of Location Theorists.Johann Heinrich von Thünen  (24 June 1783 – 22 September 1850). • was a land owner .” . cost of transporting goods in the market.

L = Y(P-C) – YDF Farm Lands Transportatio City n . 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. removal of other factors results in a homogeneous – and isolated – state: A concentric model • The Model is described as the equation.. • Concentrating in optimal use of the land surfaces and the transport costs.Von Thunen’s Model ofAgricultural Land Use • First Location Theory In his theory of "The Isolated State".

. selfsufficient with no outside influence. There is only one market available. All farmers act to maximize profits. The dietary preferences of the population are those of Germanic Europeans. 4. 3. All farmers are market oriented. 5. (Not subsistence. producing goods for sale.) The physical environment is uniform. there are no rivers or mountains. 6. 2.Contains Six Assumptions 1. All points at equal distances from the market have equal access to the market.

• Rent is highest in the closest proximity to urban markets. have high transportation costs and were in great demand would be located close to urban markets • Distance from the city • Preservation of food • Amount of space (MAJOR CONCEPT) . • Thus. which will decrease as one gets farther away from central markets.Land rent • The main concept is land rent or land value. agricultural products that have intensive land use.

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No terrain or climatic variation A Assumptions 1.Inference of Von Thunen’s Model to Continental United States Forest Wheat Dairy Forest Wheat Beef Cattle and Sheep Corn and Soybeans Vegetables Beef Cattle and Sheep Specialty Crops Cotton and Tobacco Dairy Vegetables Corn and Soybeans Cotton and Tobacco Assumptions 1. Crops ranked by rent paying ability 3. Climatic variation considered Specialty Crops B . New York City the only market 2. New York City the only market 2. Crops ranked by rent paying ability 3. No terrain variation 4.

 variations in topography  soil fertility  changes in demand or price of the commodity .Weaknesses and criticism The model was developed in an isolated state and did not take into consideration differences in sites (local physical conditions). Example: boats are the cheapest mode of transportation. It can be modified by relaxing some of the conditions set forth by Thunen:  differential transportation costs.