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# Agricultural Price Differential

## Definition

The price advantage enjoyed by agricultural producers located near towns, who receive the same price for their produce as distant producers while saving transportation costs. This differential creates economic incentives for land improvement near markets and contributes to the spatial concentration of agricultural development around urban centers.

## Source Chapter

Book III, Chapter 1

## Context

Smith uses this price differential to explain observed patterns of land cultivation and value, demonstrating how market proximity creates economic advantages that shape the spatial organization of agricultural production.

## Economic Domain

Exchange

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