Working Paper: CEPR ID: DP9435
Authors: Lus M. B. Cabral; Zhu Wang; Daniel Yi Xu
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 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.
Keywords: Employee Spinouts; Industry Agglomeration; Local Externalities
JEL Codes: J6; L0; R1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| interindustry spillovers from the carriage and wagon industry (L62) | agglomeration (R11) |
| spinouts (M13) | agglomeration (R11) |
| intraindustry spillovers (F12) | agglomeration (R11) |
| location fixed effects (C23) | agglomeration (R11) |