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Summary. 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.
Introduction
The debate on the rent gap hypothesis appearing in part in the pages of this journal has resulted in two distinct and incompatible views of the hypothesis and related issues of land rent theory (Badcock, 1990; Bourassa, 1990, 1992, 1993; Clark, 1987, 1988, 1995; Smith, 1996). This paper serves as an addition to that debate. The intentions are threefold: to comment on the debate between Bourassa and Clark in an attempt to clarify several key issues; to begin to provide the basis for a different understanding of capitalised land rent than has been suggested by either author (although it is clearly more compatible with that of Clark); and to indicate how this new view of capitalised land rent is compatible with the rent gap theory.
The rent gap hypothesis has been the subject of a tremendous amount of debate mostly centring on its effectiveness in explaining gentrification. Much criticism of the hypothesis is external in nature, critiquing the rent gap through comparisons with other preferred explanations. Steven Bourassa, however, has taken a somewhat different approach in his critique by arguing that the hypothesis suffers from serious internal inconsistencies, and essentially is in conflict with previous work in land rent theory. It is this line of argument that he has developed in his debates first with Badcock and later with Clark, and it is this contention that will be addressed here.
Three arguments form the basis of this paper. First, the fundamental disagreement in the debates involves the role of land use in determining...