This article shows the first results of a research project that attempts to analyse the relations between the business groups, the institutional framework and the economic development in 20th century Spain. It employs a microeconomic perspective, a historical-institutional analysis and private archival sources. The article focuses on the businesses of the Aznar family from 1937 (when they took over the management of the firms that formerly belonged to the Sota and Aznar group) to 1983 (when Naviera Aznar, the most important firm of the group, broke out and ceased business). Out of this empirical evidence, the article tries to underline the consequences that an industrial organization based on business groups and on an institutional framework characterized by the State's extreme interventionism and discretionality had on the capabilities and the competitiveness of Spanish firms and industries, and, by extension, on the economic development of Spain during the Franco's regime and the first Governments of the transition to democracy.

The foreclosure of downstream firms is a major feature in the study of the strategic aspects of vertical integration. The main issue is that, however profitable it may seem for integrated firms to adopt this rising rivals’ costs strategy, foreclosure fails to appear in most models, unless integrated firms are assumed to be able to commit on this strategy. We propose a model based on the idea that foreclosure results from a technological choice. This approach allows us to find equilibrium vertical foreclosure without supposing any commitment capability to integrated firms. Foreclosure results from the adoption a technology that doesn’t rely on the (standard) intermediate good traded on the market, but on a different good, not compatible with the standard technology. The possibility of a (costly) adaptation of a nonstandard good to the standard technology is explicitly taken into account in the model.