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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
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    3. Kuld, Lukas & Mitchell, Sara & Hellmanzik, Christiane, 2025. "Manhattan Transfer: Heterogeneous productivity effects of agglomeration in American authorship," Regional Science and Urban Economics, Elsevier, vol. 111(C).
    4. Lukas Kuld & Sara Mitchell & Christiane Hellmanzik, 2021. "Manhattan Transfer: Productivity effects of agglomeration in American authorship," Trinity Economics Papers tep0821, Trinity College Dublin, Department of Economics.
    5. Hanlon, W.Walker & Heblich, Stephan, 2022. "History and urban economics," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    6. Boyan Jovanovic & Zhu Wang, 2020. "Idea Diffusion and Property Rights," Working Paper 20-11, Federal Reserve Bank of Richmond.
    7. Abebe, Girum & McMillan, Margaret & Serafinelli, Michel, 2022. "Foreign direct investment and knowledge diffusion in poor locations," Journal of Development Economics, Elsevier, vol. 158(C).
    8. repec:hal:spmain:info:hdl:2441/2c47q6gpge8vrbqjak551kmu6c is not listed on IDEAS
    9. Wei Han & Ying Zhang & Jianming Cai & Enpu Ma, 2019. "Does Urban Industrial Agglomeration Lead to the Improvement of Land Use Efficiency in China? An Empirical Study from a Spatial Perspective," Sustainability, MDPI, vol. 11(4), pages 1-22, February.
    10. Cheng, Dong & Crucini, Mario J. & Oh, Hyunseung & Yilmazkuday, Hakan, 2025. "Early 20th century American exceptionalism: Production, trade and diffusion of the automobile," Journal of International Economics, Elsevier, vol. 153(C).
    11. Theophilus Lartey & Diana Owusu Yirenkyi & Samuel Adomako & Albert Danso & Joseph Amankwah‐Amoah & Ashraful Alam, 2020. "Going green, going clean: Lean‐green sustainability strategy and firm growth," Business Strategy and the Environment, Wiley Blackwell, vol. 29(1), pages 118-139, January.
    12. repec:spo:wpmain:info:hdl:2441/2c47q6gpge8vrbqjak551kmu6c is not listed on IDEAS
    13. Iacopetta, Maurizio & Minetti, Raoul & Murro, Pierluigi, 2024. "Growing through spinoffs. Corporate governance, entry dynamics, and innovation," Journal of Economic Dynamics and Control, Elsevier, vol. 161(C).
    14. Gomtsyan, David, 2022. "Merchant networks in big cities," Journal of Urban Economics, Elsevier, vol. 129(C).

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    More about this item

    Keywords

    Local externalities; Spinouts; Location advantages; Industry agglomeration;
    All these keywords.

    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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