Budweiser (now owned by a Belgium based beer company called InBev), Miller and Coors who together produce 85% of all beer consumed in the US, each spend well over $250 million a year on television advertising campaigns, promoting their beer brands. Obviously, if one firm is advertising its brands heavily, the others must also advertise to defend their market shares.
Do you think these firms would welcome congressional legislation which restricted the amount that any one firm could spend on advertising to $1 million yearly, and thereby allowed them all to drastically reduce their costs without fear of losing ground to each other? Are wireless telephone companies in the US market conducting the same practice of non-price competition? Explain your answer in both cases.