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Competitor, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry

Author

Listed:
  • Luis Cabral

    (New York University)

  • Zhu Wang

    (Federal Reserve Bank of Richmond)

  • Daniel Yi Xu

    (Duke University)

Abstract

Taking the early U.S. automobile industry as an example, we evaluate four competing hypotheses on regional industry agglomeration: intra-industry local externalities, inter-industry local externalities, employee spinouts, and location fixed effects. Our findings suggest that in the automobile case, inter-industry local externalities (particularly from the carriage and wagon industry) and employee spinouts (particularly due to the high spinout rate in Detroit) play important roles. The presence of other firms in the same industry has a negligible or negative effect. Finally, local inputs account for some agglomeration in the short run, but the effects are much more profound in the long run. (Copyright: Elsevier)

Suggested Citation

  • Luis Cabral & Zhu Wang & Daniel Yi Xu, 2018. "Competitor, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 1-29, October.
  • Handle: RePEc:red:issued:16-34
    DOI: 10.1016/j.red.2018.01.006
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Local externalities; Spinouts; Location advantages; Industry agglomeration;

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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