[charcircuit]

>that Google derives the same value from, if that value is not dependent on either person's location, then how does Google justify the differential in pay?

Because the pay is independent from the value the person is generating. It is just the amount someone is willing to accept to take the job. The amount Google pays is based off what other employers are able to offer people living in the area. They gather market data of offers made by the other employers and themselves and then choose a range that they are willing to pay hoping that paying an upper percentile will attract top talent.

>Why not only higher from LCOL areas

The two main factors are that Google wants to hire top talent and they want to have people come in to their offices which may recide in a HCOL area. For why not to split up the offices I imagine there are due to some underlying network effects with having coworkers be at the same location and partner companies being a short ways away.