A Financial-Economic von Thünen Model

R G Cromley and D M Hanink

Environment and Planning A, 1989, vol. 21, issue 7, 951-960

Abstract: The von Thünen model of agricultural land use is reformulated in this paper as an investment decision in which the objectives of farmers range from total risk-aversion to profit-maximization. By means of a variant of the mean-variance model of contemporary portfolio theory, it is demonstrated that individual bid-rent functions depend on the nature of a farmer's utility function. Because farmers' objectives affect their bid-rent functions, the spatial pattern of agricultural production is also affected. The conventional result of the von Thünen model is shown to be a special case of the more general portfolio model.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:sae:envira:v:21:y:1989:i:7:p:951-960

DOI: 10.1068/a210951

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