Economic rent is income earned by a factor of production above the minimum needed to keep it in its current use.
The term originated in classical political economy, where David Ricardo used rent to analyze payments to landowners. Ricardo argued that land of different fertility or location could generate different returns, with scarcity allowing some owners to receive income beyond what was necessary to make land available.
Modern economics applies the idea more broadly. Economic rent can arise when a worker has rare skills, when a patent limits competition, or when a firm controls a scarce natural resource. The key comparison is not simply revenue minus costs; it is payment above the factor’s opportunity cost.
Economic rent is often confused with ordinary profit or rent paid for an apartment. An apartment payment may contain returns to land, buildings, maintenance, and financing, while economic rent is a theoretical surplus. Rent-seeking describes efforts to obtain such surplus through political influence rather than by creating additional output.