In economics, economic rent is the extra return earned by a scarce factor of production beyond the amount needed to keep it in its current use.
For a factor with perfectly inelastic supply, such as a fixed quantity of land, changes in demand can raise the payment without increasing the available quantity. The resulting return is often called rent. The idea extends beyond land to other resources or advantages whose supply cannot readily expand, including especially valuable locations, unique skills, patents, or limited access rights.
Economic rent differs from ordinary rental payments in everyday speech. It is a theoretical measure of payment above opportunity cost. It also differs from profit in accounting: economists may treat returns to entrepreneurship, capital, or labor according to their opportunity costs before identifying any rent.
David Ricardo’s 1817 work Principles of Political Economy and Taxation gave classical rent theory a major place in economic analysis.