Clustering of Auto Supplier Plants in the U.S.: GMM Spatial Logit for Large Samples

38 Pages Posted: 16 Dec 2005

See all articles by Thomas Klier

Thomas Klier

Federal Reserve Bank of Chicago

Date Written: May 2005

Abstract

A linearized version of Pinkse and Slade's (1998) spatial probit estimator is used to account for the tendency of auto supplier plants to cluster together. By reducing estimation to two steps - standard probit or logit followed by two-stage least squares - linearization produces a model that can be estimated using large datasets. Our results imply significant clustering among older plants. Supplier plants are more likely to be in counties that are near assembly plants, that include interstate highways, and that are near other counties with supplier plants. New plants show no additional tendency toward clustering beyond that shown by older plants.

Keywords: Spatial econometrics, clustering, plant location, auto supplier industry

JEL Classification: R30, R15, L62

Suggested Citation

Klier, Thomas, Clustering of Auto Supplier Plants in the U.S.: GMM Spatial Logit for Large Samples (May 2005). FRB Chicago Working Paper No. 2005-18, Available at SSRN: https://ssrn.com/abstract=870611 or http://dx.doi.org/10.2139/ssrn.870611

Thomas Klier (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States

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