Scarcity Rent

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Scarcity Rent 

Besides economic rent, we have seen above, there is also scarcity rent. As the price of wheat rises. the worst land is also subjected to intensive cultivation and it yields a surplus over cost. This surplus is not a differential one compared to no-rent land, which does not exist.It is due to the scarcity of land as such. Hence, it is called scarcity rent. The rent yielded by superior lands thus contains two elements: (0) differential surplus over the marginalland, and (b) payment due to scarcity of land as such. For instance. in our illustration, if cultivation is carried to a point where the worst land pays 2 quintals of wheat as rent, the superior land will pay a scarcity rent of 2 quintals in addition to the differential rent. The superior land will” pay scarcity rent at the same rate as the worst land, but they will also pay a differential rent. As Marshall says, “in a sense all rents are scarcity rents, and all rents are differential rents.” Differential rents arise because of scarcity of each particular grade of land.

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Scarcity Rent