Working Papers

2013

 

April 2013, No. 13-04R

Competitors, Complementors, Parents and Places: Explaining Regional Agglomeration in the U.S. Auto Industry (Revised August 2014)

Luis Cabral, Zhu Wang and 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.

The NBER working paper version can be found here (article available by subscription).

Contact Us

Richmond

Lisa Kenney
(804) 697-8179