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

Jie Bai, Panle Jia Barwick, Shengmao Cao and Shanjun Li

American Economic Review, 2025, vol. 115, issue 11, 3825-52

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.

JEL-codes: F23 L15 L24 L62 O14 O33 P23 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1257/aer.20221501

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