Abstract: Spatial econometric analysis, while widely used to examine spatial dependence, suffers from understudied endogeneity issues and causal identification strategies, leading to empirical pitfalls (e.g., overstating correlation over causation) and theoretical limitations (e.g., mismatches between econometric models and mechanisms). This study examines China’s interregional public services by leveraging quasi-experimental scenarios, where provincial official turnover and factor market reforms play their respective roles, to isolate spatial spillovers via spatial IVs and system GMM estimation. Results reveal positive spatial interdependence, driven by intergovernmental competition (tied to political cycles) and factor mobility (capital/population flows), confirming causal mechanisms (yardstick competition and resource flow). By integrating quasi-experimental designs into spatial econometrics, this study advances causal inference methods and refines policy insights for regionally coordinated public service development, emphasizing cross-regional interaction and complementarity.

Key words: public services, spatial strategic interaction, spatial econometrics, quasi-experimental design