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EVOLVING AGGLOMERATION IN THE U.S. AUTO SUPPLIER INDUSTRY

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ABSTRACT. 

Using nonparametric descriptive tools developed by Duranton and Overman (2005, Review of Economic Studies, 72, 1077–1106), we show that both new and old auto supplier plants are highly concentrated in the eastern United States. Conditional logit models imply that much of this concentration can be explained parametrically by distance from Detroit, proximity to assembly plants, and access to the interstate highway system. New plants are more likely to be located in zip codes that are close to existing supplier plants. However, the degree of clustering observed is still greater than implied by the logit estimates.
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Document Type: Research Article

Affiliations: 1: Federal Reserve Bank of Chicago, Research Department, 230 S. LaSalle St., Chicago, IL 60604., Email: tklier@frbchi.org 2: Department of Economics (MC 144), University of Illinois at Chicago, 601 S. Morgan St., Chicago, IL 60607., Email: mcmillen@uic.edu

Publication date: 2008-02-01

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