This study investigates how audit firm-level spatial licensing requirements affect audit market competition and service quality. Exploiting the staggered state-level adoption of CPA firm mobility provisions which remove spatial licensing barriers imposed on out-of-state audit firms, we find that these provisions increase audit market competition and enhance audit quality. Such audit quality improvements are more pronounced for clients of non-Big 4 audit firms relative to Big 4 audit firms. Further analyses reveal that the positive effects on audit quality are more substantial when incumbent auditors face more intense competition pressures or lack a competitive edge against out-of-state audit firms in the public company audit market. Overall, our results suggest that removing spatial licensing restrictions fosters a more competitive audit market while improving audit outcomes, benefiting the broader public company audit environment.