This paper examines the optimal location-based redistribution policy and shows that adjustment for local price levels is occasionally optimal, but never for the reasons suggested by the popular press. First, the existence of a spatial equilibrium suggests that utility levels will be equalized...

This paper examines the optimal location-based redistribution policy and shows that adjustment for local price levels is occasionally optimal, but never for the reasons suggested by the popular press. First, the existence of a spatial equilibrium suggests that utility levels will be equalized...

[...]We consider two puzzles about the local safety netand New York City. First, why do big cities, and particularlyNew York, engage in so much more redistribution thansmall towns? The broad question (the connection betweencities and redistribution) is the topic of the companionpaper to this one...