American Economic Review Vol. 115 No. 11 2025

Quid Pro Quo, Knowledge Spillovers, and Industrial Quality Upgrading: Evidence from the Chinese Auto Industry

Jie Bai¹; Panle Jia Barwick²; Shengmao Cao³; Shanjun Li⁴

¹ Harvard Kennedy School and NBER (email: ) · ² University of Wisconsin-Madison, NBER, and CEPR (email: ) · ³ Kellogg School of Management (email: ) · ⁴ Stanford University and NBER (email: )

Abstract

This paper studies the impact of quid pro quo (technology for market access) in facilitating knowledge spillovers and quality upgrading in the Chinese automobile industry. The identification strategy exploits within-product quality variation across a rich set of quality dimensions. We find affiliated domestic automakers adopt more similar quality strengths of their joint venture partners, consistent with knowledge spillovers. Additional analysis suggests worker flows and supplier networks mediate knowledge spillovers. Knowledge spillovers due to ownership affiliation under quid pro quo contributed 8.3 percent of the quality improvement experienced by affiliated domestic models from 2001 to 2014, relative to nonaffiliated domestic models.

DOI

10.1257/aer.20221501

Volume

115

Issue

11

Pages

3825-3852

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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