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Ricardian Rents

FormalPara Definition

Originally associated with land, a Ricardian rent is the result of the possession of a natural or man-made idiosyncratic, scarce factor. Like profit, a Ricardian rent is a surplus earning above the costs necessary to deploy and use a resource. Unlike profit, however, it would continue exist in a hypothetical state of equilibrium as long the resource remained scarce.

In the eighteenth century, the Physiocrats gave land a special status in the economy. It was, according to François Quesnay, the only productive input. All wealth came from the land. Adam Smith and A. R. Turgot did not entirely side with the Physiocrats on that point and saw industry (e.g., Smith’s pin factory) also as a source of wealth. But land kept a special status in the writings of many classical economists, including David Ricardo. He was concerned, among other things, with explaining the earnings that accrue to different groups in society and understanding the impact of land appropriation on...

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References

  • Ricardo, D. 1821. On the principles of political economy and taxation, 3rd ed. London: John Murray.

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  • Teece, D.J., and M. Coleman. 1998. The meaning of monopoly: Antitrust analysis in high-technology industries. The Antitrust Bulletin 43: 801–857.

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Correspondence to Frederic Sautet .

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Sautet, F. (2018). Ricardian Rents. In: Augier, M., Teece, D.J. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-00772-8_514

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