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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
A3 — Management 1
Chair: Mari Tanaka (Hitotsubashi University)
Room IAB 405
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.