Land (economics)

In economics, land comprises all naturally occurring resources whose supply is inherently fixed[1]. Examples are any and all particular geographical locations, mineral deposits, forests, fish stocks, atmospheric quality, geostationary orbits, and portions of the electromagnetic spectrum. Natural resources are fundamental to the production of all goods, including capital goods. Location values must not be confused with values imparted by fixed capital improvements. In classical economics, land is considered one of the three factors of production (also sometimes called the three producer goods) along with capital, and labor. Land is sometimes merged with capital to simplify micro-economics. However, a common mistake is combining land and capital in macro-analysis. Income derived from ownership or control of natural resources is referred to as rent.

Land was sometimes defined in classical and neoclassical economics as the "original and indestructible powers of the soil."[2] Georgists hold that this implies a perfectly inelastic supply curve (i.e., zero elasticity), suggesting that a land value tax that recovers the rent of land for public purposes would not affect the opportunity cost of using land, but would instead only decrease the value of owning it. This view is supported by evidence that although land can come on and off the market, market inventories of land show if anything an inverse relationship to price (i.e., negative elasticity).

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