Consider a collection of isolated or autarkic regions. The original residents or natives of each region are by assumption a group with a welfare function defined over group members' consumption. Now suppose the regions form a common labor market and a federal government, and one type from each...

A transformation is defined and algebraic relatconships developed between the least squares coefficients, standard errors, and R2 in the original and transformed models. This complete analysis is then used to explain the impact on these quantities of different measures of the tax price and...