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Competitors, complementors, parents and places: Explaining regional agglomeration in the U.S. auto industry

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  • Luis Cabral
  • Zhu Wang
  • Daniel Yi Xu

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 inter-industry spillovers, particularly the development of the carriage and wagon industry, play an important role. Spinouts play a secondary role and only contribute to agglomeration at later stages of industry evolution. The presence of other firms in the same industry has a negligible (or maybe even negative) effect on agglomeration. Finally, location fixed-effects account for some agglomeration, though to a lesser extent than inter-industry spillovers and spinouts.

Suggested Citation

  • Luis Cabral & Zhu Wang & Daniel Yi Xu, 2013. "Competitors, complementors, parents and places: Explaining regional agglomeration in the U.S. auto industry," Working Paper 13-04, Federal Reserve Bank of Richmond.
    • Handle: RePEc:fip:fedrwp:13-04
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    References listed on IDEAS

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    2. Maurizio Iacopetta & Raoul Minetti & Pierluigi Murro, 2020. "Growing Through Spinoffs," SciencePo Working papers Main hal-03389197, HAL.
    3. Maurizio Iacopetta & Raoul Minetti & Pierluigi Murro, 2020. "Growing through Spinoffs. Corporate Governance, Entry, and Innovation," Documents de Travail de l'OFCE 2020-13, Observatoire Francais des Conjonctures Economiques (OFCE).
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    5. Hanlon, W.Walker & Heblich, Stephan, 2022. "History and urban economics," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    6. 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).
    7. Boyan Jovanovic & Zhu Wang, 2020. "Idea Diffusion and Property Rights," Working Paper 20-11, Federal Reserve Bank of Richmond.
    8. Abebe, Girum & McMillan, Margaret & Serafinelli, Michel, 2022. "Foreign direct investment and knowledge diffusion in poor locations," Journal of Development Economics, Elsevier, vol. 158(C).
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    More about this item

    Keywords

    Economic growth; Regional economics; Automobile industry and trade;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • L0 - Industrial Organization - - General
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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