Rich Man-Poor Man in Von Thunen's Isolated State

von Thfinen and those elaborating upon his ideas (see for example, Hall [2], Dunn [1], and Jones [3]) have generally ignored the welfare implications of the model. A notable exception is a recent paper by O'Sullivan and Ralston [4] which demonstrates the equivalence between location rent and consumer surplus. This important result notwithstanding, it is difficult to see how we might view von Thfinen from a welfare perspective, since it is hard to talk about well-being or "who gets what" without talking about people or classes of people. The solution to the "people problem" suggested in this paper is to start populating the state with different kinds of people. To be more specific, the market town is assumed to be populated with two types or classes of people-poor people and rich people. The welfare implications are then statements concerning the diets of the people in each class and the income left over for other goods and services after a person has paid his or her food bill. The income distribution in the market is also shown to have an influence upon production patterns and the location rents in the surrounding rural area.