Verizon Wireless, AT&T, T-Mobiles and Sprint together provide over 90% cellphone services in the US wireless voice & data market. Each of these service providers spends hundreds of millions of dollars a year on television advertising to promote their coverage and quality of voice, video and data services. Obviously, if one company is advertising its service quality heavily, the other must also advertise to protect their customer base (market share). The similar situation applies to US based major beer companies such as 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.
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 (and thus increasing profits) without fear of losing ground to each other? Explain your answer in both cases.