Von Thunen Model

An economic land use model developed to explain the variation in the pricing structure of agricultural commodities, based on zones of production. The model is still widely studied and critiqued as a tool of analysis in economic geography, and stands as one of the first examples of applied locational analysis. A subsequent body of theory in urban and economic geography emerged from revisions of von Thunen’s original work, including Alonso’s bid-rent theory, an application of von Thunen’s agricultural-based ideas to the 20th-century urban environment.

Johan Heinrerich von Thunen was a businessman and landowner living in northern Germany in the early 19th century. The fact that von Thunen was a resident of northern Germany is relevant, because unlike in Bavaria, the landscape in the north is relatively flat, a feature of the local geography that clearly played a part in the formation of his theory. As a businessman, von Thunen was interested in discovering new methods of maximizing his profits, and in particular he put considerable thought into the spatial ordering of production and transport of goods to the market. After a number of years of observation and the development of a mathematical model, he published his ideas in 1826 in his seminal work, The Isolated State.

Like all models, von Thunen’s theory represents an idealized situation, and he begins with a series of assumptions that he recognizes do not precisely reflect reality. Nevertheless, these approximate the spatial and economic dynamics as von Thunen interpreted them in the pre-industrial economy he was observing. First, von Thunen assumed the existence of a single market town located at the center of a flat, uniform plain. There are no intervening settlements offering marketing opportunities between areas of agricultural production and this market—all production must be marketed and consumed in this single location. Second, the agricultural region surrounding the market town is homogeneous in terms of all factors affecting production. In other words, there is no spatial variation in soil quality, availability of water, input of labor, fertilizer, etc., and in theory, any crop may be grown for profit on any land around the market. Moreover, von Thunen assumed that only a single means of transportation was available to agricultural producers (an oxcart), and that all farmers living at a similar distance from the market had equal access to this type of transport. Farmers would carry their goods directly across the landscape to the market, as no roads or pathways exist. In order to market their crops, all farmers must deliver them in acceptable condition, meaning that any part of the harvest that is spoiled or stale cannot be marketed and has no value. Each farmer must pay for transport of his goods, and this cost is directly proportional to the distance from the market. Finally, everyone in the system is assumed to be motivated to maximize their profits and has the ability to switch to crops that are more profitable if that option is available.