The Evolution of Urban Rent Theory: Class and Distribution

Abstract

Rent as a category has been analyzed within economics for over 250 years. Though much has changed since the days of David Ricardo, and Johann von Thűnen, most contemporary theorists consider themselves to be aligned with these early thinkers. More significantly, there is a pervasive belief that the power relationships explicated in the late 1700s and early 1800s hold for urban rent today.

This has had two consequences. First, as urban economists continue to justify their work within a much older tradition, the move from production cost theories towards marginalist approaches has occurred largely without comment. Second, the existing urban power structures, with their particular causes and evolutionary histories, have been under-evaluated. The result is landlords seen as either exclusively functional, or as landed aristocrats, neither view producing instrumentally useful analysis for the urban market today.

The first portion of this paper outlines the evolution of urban rent approaches, calling attention to the theoretic shifts which have occurred in the meaning of the market. This establishes the need for the latter half of the work, which outlines the basis for an institutionally grounded approach to urban rent. Such a theory is necessary if there is any hope of illuminating the distributional impacts of rental housing allocation.

Keywords:

• rent theory
• urban economics
• house pricing

JEL Classification Codes:

• B0
• B5
• R0
• R3

Disclosure Statement

In accordance with Taylor & Francis policy and my ethical obligation as a researcher, I am reporting that I have received no financial or non-financial support for this research.

Notes

1 This issue of whether rents include payments for fixed assets is rarely addressed directly in the literature. For instance, Thrall makes no reference to housing in his rent theory, while Hurd relies heavily on income capitalization multipliers to determine price.

Additional information

Notes on contributors

Ely Melchior Fair

Ely Melchior Fair is a visiting instructor at Knox College and a PhD candidate at the University of Missouri: Kansas City.