We all hear the typical Chamber of Commerce slogan, “ buy local... keep the jobs at home.” At first blush this sounds logical and almost “ patriotic,” and in many cases, it’s quite reasonable and appropriate. If I can buy locally grown vegetables at a local market, I get freshness and with less transport involved; it’s the “ green” thing to do. The price, presumably, is also competitive.
This local idea goes off the tracks, for example, with local government purchases. If a local government or school board gives too much preference to local firms, they will end up paying higher prices. If the council gets a reputation for being “ homers,” firms will stop bidding. With less competition the result is higher prices and thus higher taxes.