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

  • Luís Cabral
  • Zhu Wang
  • Daniel Yi Xu

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 work as a special type of intra-industry spillovers. The presence of other firms in the same industry has a negligible (or even negative) effect. Finally, local inputs account for some agglomeration in the short run, but the effects are much more profound in the long run.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18973.

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Date of creation: Apr 2013
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Handle: RePEc:nbr:nberwo:18973
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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  2. Guido Buenstorf & Steven Klepper, 2005. "Heritage and Agglomeration: The Akron Tire Cluster Revisited," Papers on Economics and Evolution 2005-08, Philipps University Marburg, Department of Geography.
  3. Guy Dumais & Glenn Ellison & Edward Glaeser, 1997. "Geographic Concentration as a Dynamic Process," NBER Working Papers 6270, National Bureau of Economic Research, Inc.
  4. Zhu Wang & Luis Cabral, 2013. "Spin-offs: Theory and Evidence from the Early U.S. Automobile Industry," 2013 Meeting Papers 942, Society for Economic Dynamics.
  5. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
  6. Esteban Rossi-Hansberg & Satyajit Chatterjee, 2007. "Spin-offs and the Market for Ideas," 2007 Meeting Papers 86, Society for Economic Dynamics.
  7. April Franco & Darren Filson, 2000. "Knowledge diffusion through employee mobility," Staff Report 272, Federal Reserve Bank of Minneapolis.
  8. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
  9. Glenn Ellison & Edward L. Glaeser, 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," NBER Working Papers 4840, National Bureau of Economic Research, Inc.
  10. J. Vernon Henderson & Ari Kuncoro & Matthew Turner, 1992. "Industrial Development in Cities," NBER Working Papers 4178, National Bureau of Economic Research, Inc.
  11. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
  12. repec:rje:randje:v:37:y:2006:i:4:p:841-860 is not listed on IDEAS
  13. Klepper, Steven, 2010. "The origin and growth of industry clusters: The making of Silicon Valley and Detroit," Journal of Urban Economics, Elsevier, vol. 67(1), pages 15-32, January.
  14. April Mitchell Franco & Darren Filson, 2006. "Spin‐outs: knowledge diffusion through employee mobility," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 841-860, December.
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