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Why does entry cluster geographically? Evidence from the US tire industry

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  • Buenstorf, Guido
  • Klepper, Steven

Abstract

We trace the geographic and intellectual heritage of the early entrants into the US tire industry in Ohio, the industry's historical center. We test a model in which the supply of capable entrants, localized knowledge, and production externalities influence where entrants originated and located. Entry clustered around existing tire producers and in more populated regions, which we attribute mainly to the supply of capable entrants. Production externalities influenced the profitability of operating in a region, but their effect was limited by the localized knowledge of entrants. Entry fueled agglomeration mainly through an endogenous process governing the supply of capable entrants.

Suggested Citation

  • Buenstorf, Guido & Klepper, Steven, 2010. "Why does entry cluster geographically? Evidence from the US tire industry," Journal of Urban Economics, Elsevier, vol. 68(2), pages 103-114, September.
    • Handle: RePEc:eee:juecon:v:68:y:2010:i:2:p:103-114
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