If Budweiser, Miller and Coors, who together produce 80% of all beer consumed in the US, each spend well over $500 million a year on television advertising campaigns, promoting their beer brands. Would these firms welcome congressional legislation which restricted the amount that any one firm could spend on advertising to $5 million yearly, and thereby allowed them all to reduce their costs dramatically without fear of losing ground to each other?

Question

If Budweiser, Miller and Coors, who together produce 80% of all beer consumed in the US, each spend  well over $500 million a year on television advertising campaigns, promoting their beer brands.   Would these firms welcome congressional legislation which restricted the amount that any one firm could spend on advertising to $5 million yearly, and thereby allowed them all to reduce their costs dramatically without fear of losing ground to each other?

economyst · Answer

Good tough question in which there is no right answer. But take a shot, what do you think.

Hint: Cigarette makers welcomed a similar restriction in 1971
Hint 2: what do you think is the price elasticity of beer?