Economic Brief

2012

 

October 2012, No. 12-10

Explaining an Industry Cluster: The Case of U.S. Car Makers from 1895-1969

David A. Price and Zhu Wang

The geographic clustering of companies within an industry is often attributed to several agglomeration economies: intra-industry spillovers (benefits from proximity to firms in the same industry), inter-industry spillovers (benefits from proximity to firms in related industries), and spinoffs (firms established by former employees of a company in the same industry). Analysis of data on the U.S. auto industry in its first 75 years sheds light on the relative importance of those forces to the clustering of car makers.

Additional Resources

Cabral, Luís, Zhu Wang, and Daniel Xu, "Competitors, Complementors, and Parents: Explaining Regional Agglomeration in the U.S. Auto Industry," Presentation at the Federal Reserve Bank of Richmond, August 1, 2012.

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