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.