Thomas H. Klier

Clustering of Auto Supplier Plants in the United States

A linearized logit version of Pinkse and Slades spatial GMM estimator reduces estimation to two steps—standard logit followed by two-stage least squares. Linearization produces a model that can be estimated using large datasets. Monte Carlo experiments suggest that the linearized model accurately identifies the presence of spatial effects and is capable of producing accurate estimates of marginal effects. In an application to the location of supplier plants in the U.S. auto industry, the results imply no additional clustering of new plants beyond the level of clustering of existing plant locations.

EVOLVING AGGLOMERATION IN THE U.S. AUTO SUPPLIER INDUSTRY

Using nonparametric descriptive tools developed by Duranton and Overman (2005), we show that both new and old auto supplier plants are highly concentrated in the eastern United States. Conditional logit models imply that much of this concentration can be explained parametrically by distance from Detroit, proximity to assembly plants, and access to the interstate highway system. New plants are more likely to be located in zip codes that are close to existing supplier plants. However, the degree of clustering observed is still greater than implied by the logit estimates.

A Mixed Bag: Assessmentof Market Performance and Firm Trading Behaviour in the NOx Reclaim Programme

Tradable permit markets have become an increasingly popular tool to address environmental policy problems. This paper describes and evaluates the performance of the Regional Clean Air Incentives Market (RECLAIM) that started operating in Southern California at the beginning of 1994. In analysing overall market performance as well as industry and firm specific information,we find strong evidence for uncertainty influencing market participation during the first two years. Furthermore we find evidence for flexibility-induced abatement cost savings as well as a potential business cycle effect on trading behaviour.Our findings emphasizethe importanceof institutional features of trading programmes.

Where the Headquarters Are: Location Patterns of Large Public Companies, 1990-2000

This article examines the location of headquarters growth of large public companies during the 1990s. Headquarters continue to be attracted by large metropolitan areas. Yet among that group, they continue to disperse into medium-sized centers. This article identifies six different categories of gross flows underlying the net change of headquarters observed during the 1990s. There is strong variation among the 50 largest metropolitan areas in terms of the composition of these gross flows. On average, entry and exit represent more than two thirds of all gross flow activity. Pure relocation of headquarters is found to lead to urbanization. Mergers tend to have no impact on the distribution of headquarters across Metropolitan Statistical Areas (MSAs). A binomial probability model of the decision to move uses company-level and MSA-level data and finds that MSA-level amenities affect a company’s choice about where to locate its headquarters.

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

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.

Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden

France, Germany, and Sweden link vehicle taxes to the carbon dioxide (CO2) emissions rates of passenger vehicles. Based on new vehicle registration data from 2005–2010, a vehicle’s tax is negatively correlated with its registrations. The effect is somewhat stronger in France than in Germany and Sweden. Taking advantage of the theoretical equivalence between an emissions rate standard and a CO2-based emissions rate tax, we estimate the effect on manufacturers’ profits of reducing emissions rates. For France, a decrease of 5 grams of CO2 per kilometer reduces profits by 24 euros per vehicle. We find considerable heterogeneity across manufactures and countries.

The Price of Gasoline and the Demand for Fuel Economy: Evidence from Monthly New Vehicles Sales Data

This paper uses a unique data set of monthly new vehicle sales by detailed model from 1978- 2007, and implements a new identification strategy to estimate the effect of the price of gasoline on consumer demand for fuel economy. We control for unobserved vehicle and consumer characteristics by using within model-year changes in the price of gasoline and vehicle sales. We find a significant demand response, as nearly half of the decline in market share of U.S. manufacturers from 2002-2007 was due to the increase in the price of gasoline. On the other hand, an increase in the gasoline tax would only modestly affect average fuel economy.

The Effect of Vehicle Fuel Economy Standards on Technology Adoption

Many countries are tightening passenger vehicle fuel economy standards. The literature on passenger vehicle standards has used structural models to estimate their welfare effects. This paper provides the first empirical evidence on the effects of recently tightened fuel economy standards on technology adoption. Specifically, it investigates changes in the rate and direction of technology adoption, that is, the extent to which technology is used to increase fuel economy at the expense of other vehicle attributes. We find that recent U.S. and European standards have both increased the rate of technology adoption and affected the direction of technology adoption. Producers reduced horsepower and torque compared to a counterfactual in which fuel economy standards remained unchanged. We estimate opportunity costs from reduced horsepower and torque to be of similar magnitude as the gains from fuel savings.

Restructuring of the U.S. Auto Industry in the 2008-2009 Recession

After many years of declining fortunes, the Detroit Three carmakers were at risk of closure and liquidation during the severe recession of 2008-2009. Efforts by the Bush and Obama administrations to support the carmakers culminated in a government-managed reorganization of Chrysler and General Motors during 2009. As a result of the restructuring, the two carmakers emerged from bankruptcy protection with lower labor costs, higher capacity utilization, and a more concentrated geographic distribution of assembly plants.

What role did regional policy play in addressing the US auto industry crisis

One of the first challenges of the newly inaugurated Obama Administration in 2009 was the parlous state of the Detroit 3 carmakers (Chrysler Group, Ford Motor Company, and General Motors Company). Without government intervention, Chrysler and GM faced the strong possibility of having to close their operations and to liquidate their assets. The Obama Administrations publicly stated justification for rescuing Chrysler and GM was twofold: (1) short-term stabilisation of the national economy, (2) long-term strengthening of US manufacturing. Regional policy was not publicly stated as an important goal, but this paper concludes that one result of the rescue has been a tacit implementation of a regional industrial policy in the USA, though not an explicitly adopted strategy.