Evolution Of A New Auto Industrial District

The emergence of the southeastern United States as a shared region by global automakers demonstrates the organic development of a new industrial district. Initial core pioneers in such districts tend to develop crucial supplier networks around them, leading to possible upstream cooperation for otherwise competitive downstream assemblers. Empirical evidence suggests that a core plant will spark the formation of a sharable supply network, differentiated by criticalness of parts, distance from plant, and timing of establishment. However, these links may result in skewed private and public incentives, which are modeled in a game-theoretic framework. If left to market solutions, unusual yet potentially significant intra- and inter-regional market failures may emerge, leading to potential justification for planning intervention.

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