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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
Note: IO PR
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  1. 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.
  2. 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.
  3. Glenn Ellison & Edward L. Glaeser & William Kerr, 2007. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," NBER Working Papers 13068, National Bureau of Economic Research, Inc.
  4. Satyajit Chatterjee & Esteban Rossi-Hansberg, 2007. "Spin-offs and the market for ideas," Working Papers 07-15, Federal Reserve Bank of Philadelphia.
  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. 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.
  7. April Mitchell Franco & Darren Filson, 2000. "Knowledge diffusion through employee mobility," Staff Report 272, Federal Reserve Bank of Minneapolis.
  8. 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.
  9. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
  10. Guido Buenstorf & Steven Klepper, 2009. "Heritage and Agglomeration: The Akron Tyre Cluster Revisited," Economic Journal, Royal Economic Society, vol. 119(537), pages 705-733, 04.
  11. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  12. Guy Dumais & Glenn Ellison & Edward L Glaeser, 1998. "Geographic Concentration as a Dynamic Process," Working Papers 98-3, Center for Economic Studies, U.S. Census Bureau.
  13. repec:rje:randje:v:37:y:2006:i:4:p:841-860 is not listed on IDEAS
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