[bobmarino]

another term for the local multiplier is the local premium, but the point being is that if you have 2 cities, one near , city L, and one far, city F, if you buy from small firms in city L more of your dollars will be recycled back into city L than if you purchased from larger firms. This is not an argument that purchasing locally produces a more Pareto efficient result for your "big market" comprised of both city L and F, it only means that a greater proportion of benefit accrues to city L. That is why I stated it is consistent with a neoclassical approach. Now I would separately argue that Pareto optimality should not be the goal of society, and that its public policy justification in Utilitarianism philosophy stands on very shaky ground. Moreover, that the niceties of neoclassical economics depend on simplified, ideal conditions that ignore real world complexities, human psychology, as well as empirical evidence.