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

40 Pages Posted: 16 Apr 2013 Last revised: 11 Aug 2015

See all articles by Luis M. B. Cabral

Luis M. B. Cabral

New York University (NYU) - Leonard N. Stern School of Business - Department of Economics; Centre for Economic Policy Research (CEPR)

Zhu Wang

Federal Reserve Banks - Federal Reserve Bank of Richmond

Daniel Yi Xu

Duke University

Multiple version iconThere are 2 versions of this paper

Date Written: August 2015

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 spillovers from the precedent industry (carriage and wagon in the case of automobile) play an important role. Spinouts play a secondary role and may 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.

Keywords: local externalities, employee spinouts, industry agglomeration

JEL Classification: J06, L00, R01

Suggested Citation

Cabral, Luis M. B. and Wang, Zhu and Yi Xu, Daniel, Competitors, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry (August 2015). FRB Richmond Working Paper No. 13-04R. Available at SSRN: https://ssrn.com/abstract=2251468 or http://dx.doi.org/10.2139/ssrn.2251468

Luis M. B. Cabral

New York University (NYU) - Leonard N. Stern School of Business - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-998-0858 (Phone)
212-998-4218 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~lcabral

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Zhu Wang (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Daniel Yi Xu

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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