The Impact of Competition on “make-or-buy” Decisions: Evidence from the Spanish Local Tv Industry

Ricard Gil (Johns Hopkins Carey Business School)
Christian A. Ruzzier (Universidad de San Andres)

Abstract: This paper empirically investigates whether changes in product market competition affect firm boundaries. Exploiting regulation-induced shocks to entry barriers and differences in regulation enforcement across cities to obtain exogenous variation in competition, we establish a negative causal effect of competition (through reduced entry barriers and a larger number of rival firms) on vertical integration in the setting of the Spanish local television industry between 1995 and 2002.

Download the paper