1. Design a simple two-company game that illustrates why it might have been in the economic interests of the cigarette companies to support the ban. In designing the game, assume that there is no regulation and that the two firms simultaneously choose between advertising and not advertising. Display your hypothetical payoffs in strategic form (refer to Managerial Economics - a problem solving approach, 3rd edition: see Table 15.7, pg.176; 4th edition: see Table 15.7, pg.193) and highlight the Nash equilibrium.Explain the intuition for why the firms in your example would favor regulation to ban advertising.
2. Can you conclude from your example that all firms in all industries will favor bans on television advertising? Explain. Can you ever envision a situation where one firm might favor the ban and a competing firm might be against it? Explain your opinion.
3. Compare and contrast the cigarette industry in the 20th century with the vaping industry today. -Would you support ban on advertising vaping? -Should the vaping industry undergo the same public policy restrictions and taxations that the cigarette industry went through in the past? -Explain how the vaping novelty affect young people health and project effective policies to minimize the nicotine consumption in the next 5-10 years.