Marshall's Parable of the Meteoric Stones: Rent, Quasi-Rent and Interest

Marshall defended the classical concepts of land, labor and capital, even though many of his neoclassical contemporaries rejected these old distinctions and explained all factor incomes with a unified and general theory. In his parable of the meteoric stones, Marshall illustrated the principles that separately determine rent, quasi-rent and interest; but he reconciled the old and the new by making special assumptions, which he did not fully explain. His theory of rent requires the supply of land to be perfectly inelastic, and his doctrine of quasi-rent implies that markets are imperfectly competitive.