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Details On Von Thunen Model
Details On Von Thunen Model
ECONOMIC GEOGRAPHY
Hanoi, 2019
Introduction
Introduction
Von Thünen Model
→ Explain the importance of proximity to market in
the choice of crops on commercial farms (the
agricultural landuse at a given location)
→ Analyse geographical factors (e.g. distance) from
an economics perspective
Spartial distribution
→ illustrate the balance between land costs and
transportation costs
Assumptions
❑ Explicit assumptions
1. An isolated state
→ self sufficient and
has no external influences
2. Centrally located market
→ the sole urban market
3. Isotropic plain
→ production and transport costs were the same everywhere
4. Uniform transportation and transport costs
→Only one form of transport (e.g. wagon, oxcart)
→No roads, products are transported across land, directly to the market
→Increase distance, increase transport cost
5. Farmers are economic men and aim at maximizing profits
6. Same market price
Assumptions
❑ Implicit assumptions
1. An isolated state
2. Land use competition under a capitalistic economy
3. Economic rent is the determining factor
4. Productivity could be raised
5. Steepness of an economic rent curves are governed by
the degree of perishability of farm produce and the
relative ease of transporting
6. Growing of temperate area crops
7. No catastrophic event
8. No chance factor
9. All parties are price-takers under perfect competition
Nguyen Hoang Nam The Von Thünen Model
Introduction
Assumptions and Concepts
The model and some modified conditions
The follow-ups
Concepts
❑ Economic rent
Net return = Market price – Production cost – Transport cost
Where: Farmers got the same price (revenue) for their crops
Production cost = constant
Transport cost increase with distance
→ Net return decreases with increasing distance from the market
Concepts
❑ Location rent
LR = Y(m-c-td)
Where: LR: Location rent (land rent)
Y: Yields per unit of land
m: Market price per unit
c: Production costs per unit
t: Transportation costs per unit
d: distance from the market
→ Different crops have different location rent distribution patterns (bit rent curves)
→ Different crops compete with each other’s farmland
→ Concentric land use pattern was formed
Concepts
❑ Distance decay mechanism
→ Locational rent decreasing with increasing distance from market
The model
❑ Crop Theory
Crops with the highest economic rent will be grown.
This concept applies to any location.
The model
Y m c t di
a 60 2.000 1.000 200 ?
b 50 3.000 2.200 80 ?
c 100 1.500 1.200 20 ?
d 50 2.000 1.600 50 ?
Ra A
Rent Stock farming (Maximum radian ): 38km away
Question 1: Allocate crops to farm areas to
Rb maximize economic benefits
Rc Question 2: Identify di
Rd
b a
? ? distance
c
The model
60(2.000 − 1.000) − 60 • 200 x = 50(3.000 − 2.200) − 50 • 80 x
50(3.000 − 2.200) − 50 • 80 x = 100(1.500 − 1.200) − 100 • 20 x → D1 = 2,5; D2 = 5
100(1.500 − 1.200) − 100 • 20 x = 50(2.000 − 1.600) − 50 • 50 x
Y m c t di
a 60 2.000 1.000 200 5
b 50 3.000 2.200 80 10
c 100 1.500 1.200 20 15
d 50 2.000 1.600 50 8
Central market
River
dairy & vegetables
forestry
Darker region
represents
50%
or more lack
convenience
of
supermarket
Market gardens are close to urban centers.
Introduction
Assumptions and Concepts
The model and some modified conditions
The follow-ups
The follow-ups
Von Thünen model is the basis for the “bid rent” theory applied to
urban areas
The follow-ups
▪ The location rent curve (often regarded as bid-rent curve) (Alonso, 1960)– a
combination of land prices and distances among with the individual (or firm) is
indifferent. It describe the prices a household (or firm) would be willing to pay for
accessibility.
▪ The gradient is related to the marginal cost of distance from the center of the
activity.
▪ Retailing would have the highest marginal cost, housing the lowest.
Nguyen Hoang Nam The Von Thünen Model
Introduction
Assumptions and Concepts
The model and some modified conditions
The follow-ups
The follow-ups