2007/04/01 by Steven Klepper · 657 citations
Economics, Econometrics and Finance · Engineering · Social Sciences · #Automotive industry #Business #Capital (architecture) #Cultural Industries and Urban Development #Economic geography #Economics #Economies of agglomeration #Engineering #Geography #Industrial organization #Market economy #Microeconomics #Production (economics) #Regional Economic and Spatial Analysis #Regional Economics and Spatial Analysis
paper · doi:10.1287/mnsc.1060.0683
published in Management Science 53(4), 616-631 (Institute for Operations Research and the Management Sciences)
openalex publication_date 2007/04/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/03
The agglomeration of the automobile industry around Detroit, Michigan is explained using a theory in which disagreements lead employees of incumbent firms to found spinoffs in the same industry. Predictions of the theory concerning entry and firm survival are tested using data on the origin, location, and years of production of every entrant into the industry from 1895 to 1966. The geographic concentration of the industry is attributed to four early successful entrants and the many successful spinoffs they spawned in the Detroit area and not to conventional agglomeration economies benefiting co-located firms, as featured in modern theories of agglomeration. Implications of the findings regarding firm strategy are discussed.