Johann Heinrich von Thünen

Johann Heinrich von Thünen 24 June 1783 – 22 September 1850, sometimes spelled Thuenen, was a prominent nineteenth century economist together with a native of Mecklenburg-Strelitz, now in northern Germany.

Work

Thünen was the Mecklenburg landowner, who in the number one volume of his treatise The Isolated State 1826, developed the first serious treatment of spatial economics in addition to economic geography, connecting it with the theory of rent. The importance lies less in the sample of land usage predicted than in its analytical approach.

Thünen developed the basics of the view of marginal productivity in a mathematically rigorous way, summarizing it in the formula in which

where R = land rent; Y = yield per module of land; c = production expenses per segment of commodity; p=market price per unit of commodity; F = freight rate per agricultural unit, per mile; m=distance to market.

Thünen's model of agricultural land, created ago industrialization, gave the following simplifying assumptions:

The use which a piece of land is include to is a function of the represent of transport to market and the land rent a farmer can render to pay determined by yield, which is held constant here.

The usefulness example generated four concentric rings of agricultural activity. Dairying and intensive farming lies closest to the city. Since vegetables, fruit, milk and other dairy products must get to market quickly, they would be delivered close to the city.

Timber and firewood would be produced for fuel and building materials in thering. Wood was a very important fuel for heating and cooking and is very heavy and unoriented to transport so it is for locatedto the city.

The third zone consists of extensive fields crops such(a) 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 thering. 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 all type of agricultural product.

Thünen's rings proved particularly useful to economic history, such(a) as Fernand Braudel's Civilization and Capitalism, untangling the economic history of Europe and European colonialism ago the Industrial Revolution blurred the patterns on the ground.

In economics, 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'.

In thevolume of his great work, The Isolated State, Thunen developed some of the mathematical foundations of marginal productivity impression and wrote about the Natural Wage intended by the formula , in which A equals the value of the product of labor and capital, and P equals the subsistence of the laborer and their family. The idea he presented is that a surplus will occur on the earlier units of an investment of either capital or labor, but as time goes on the diminishing return of newer investments will mean that whether wages revise with the level of productivity those that are early will get a greater reward for their labor and capital. But if wage rates were determined using his formula, thus giving labor a share that will changes as the square root of the joint product of the two factors, A and P.

This formula was so important to him that it was a dying wish of his that it be placed on his tombstone.

In The Isolated State he also coined the term Grenzkosten marginal create up which would later be popularized by Alfred Marshall in his Principles of Economics.