Embedded rent

From the BBC:

The cheapest pint of beer is 28p cheaper in pubs in the north of England compared with south-eastern hostelries, a survey suggests... Rates and rents were often higher for London publicans and that could be reflected in the cost of a drink, said Tony Jerome, spokesman for the Campaign for Real Ale (Camra).

Like I've always said, goods which can be freely transported around the country cost more or less the same everywhere in the country. Stuff which can't (i.e. land) costs wildly different amounts depending on where in the country it is (we are talking a factor of a million between the cheapest and the most expensive).

There is an intermediate category of goods/services which have to be consumed at or very near the point of purchase, where there is some difference in price, beer being a good example, I refer to that extra 28p in the south-east as "embedded rent".

But Camra have got their explanation upside down; land owners in London can't just set rents however high they please, the point is that pub landlords can sell their beer for higher prices (more tourists, people have more money etc) and so they just do. The unit cost of serving beer is not much higher in London that anywhere else, so the difference is soaked up by the landowners in higher rents. And the business rates come out of the rents which the landowner would have collected anyway, they are not in addition to them.