Studying local politics is key to answering fundamental questions of who gets what, how, and when in the United States. And understanding institutions — the rules and structures that shape the aggregation of preferences and political outcomes — is crucial to this endeavor. In part this is because local governments are not sovereign in the federal structure and so naturally, studying cities requires understanding the context in which they are embedded. But it is also because cities feature endless variation in their formal and informal governing arrangements. These institutional differences affect representation, accountability, and the provision of public goods and services. In this article, I offer an overview of what we know about the political economy of subnational governments, discuss some of the frontiers of knowledge still to be discovered, and put forth a plea for the importance of answering political economy questions at the local level. I argue that studying local institutional variation advances our understanding of institutional development, maintenance, and consequences more generally.