NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Luís Cabral, Zhu Wang, Daniel Yi Xu

NBER Working Paper No. 18973
Issued in April 2013
NBER Program(s):   IO   PR

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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This paper was revised on August 11, 2014

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Document Object Identifier (DOI): 10.3386/w18973

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