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Re-establishing the Rent Gap: An Alternative View of Capitalised Land Rent

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  • Daniel J. Hammel

    (Department of Geography-Geology, Illinois State University, Campus Box 4400, Normal, IL61790-4400, USA, dhammel@ilstu.edu)

Abstract

The debate between the proponents of the rent gap hypothesis and Steven Bourassa concerning its internal consistency centres on the role of land use in capitalised land rent. Bourassa argues that capitalised land rent is nonsensical because it is determined in part by land use which is in conflict with land rent theory. The paper explores the determinants of capitalised land rent by reviewing the rent gap hypothesis and related research, and argues that the issue of scale is implicit in the rent gap. Land rent can be determined at a minimum of two scales resulting in at least two different land rents. This argument rectifies Bourassa's contentions, and is consistent with the theoretical foundations of the rent gap.

Suggested Citation

  • Daniel J. Hammel, 1999. "Re-establishing the Rent Gap: An Alternative View of Capitalised Land Rent," Urban Studies, Urban Studies Journal Limited, vol. 36(8), pages 1283-1293, July.
    • Handle: RePEc:sae:urbstu:v:36:y:1999:i:8:p:1283-1293
    DOI: 10.1080/0042098992999
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    References listed on IDEAS

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    1. Warren R. Seyfried, 1963. "The Centrality of Urban Land Values," Land Economics, University of Wisconsin Press, vol. 39(3), pages 275-284.
    2. Steven C. Bourassa, 1993. "The Rent Gap Debunked," Urban Studies, Urban Studies Journal Limited, vol. 30(10), pages 1731-1744, December.
    3. Edel, Matthew & Sclar, Elliott, 1975. "The distribution of real estate value changes: Metropolitan Boston, 1870-1970," Journal of Urban Economics, Elsevier, vol. 2(4), pages 366-387, October.
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