2 research outputs found
Network Effects and Geographic Concentration of Industry
This paper provides a theory of 'family network,' in contrast to 'local
externalities,' to explain the geographic concentration of industry. For
many industries, one most important source of entrants is spinoffs, who
typically locate near parent firms and benefit from knowledge linkage
and business relation within the family network. As a result, firms are
more likely to enter and less likely to exit if they are associated with
a large family. Using a unique dataset of US automobile industry in its
early years, we identify six historically important production centers
and sixty spinoff families. Our empirical analysis disentangles the
effect of 'family networks' from other 'local externalities,' and
provides strong evidence that it was the former rather than the latter
that caused the geographic concentration of US automobile production
Network Effects and Geographic Concentration of Industry
This paper provides a theory of 'family network,' in contrast to 'local
externalities,' to explain the geographic concentration of industry. For
many industries, one most important source of entrants is spinoffs, who
typically locate near parent firms and benefit from knowledge linkage
and business relation within the family network. As a result, firms are
more likely to enter and less likely to exit if they are associated with
a large family. Using a unique dataset of US automobile industry in its
early years, we identify six historically important production centers
and sixty spinoff families. Our empirical analysis disentangles the
effect of 'family networks' from other 'local externalities,' and
provides strong evidence that it was the former rather than the latter
that caused the geographic concentration of US automobile production