DP9435 Competitors, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry
|Author(s):||Luís M B Cabral, Zhu Wang, Yi (Daniel) Xu|
|Publication Date:||April 2013|
|Keyword(s):||Employee spinouts, Industry agglomeration, Local externalities|
|JEL(s):||J6, L0, R1|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=9435|
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.