In exercise 19.6, we explored the idea of city wage taxes and noted that these were exceedingly rare and occurred primarily in very large cities. We explained this by noting that labor demand and supply are more wage elastic locally than they are nationally — because firms and workers can move from one city to another more easily than they can move from one country to another. We then suggested that it would make sense for a mayor of a city (that wants to raise revenues by taxing wages) to ask the national government to increase wage taxes nationally and pass back the revenues to cities and other communities in the form of grants. Review the logic behind this. If cities persuaded the national government to do this, in what way are they overcoming a prisoners’ dilemma? Have they found a way to successfully collude (in a way similar to cartels)?