1. In 2011, a new program was put in place that allowed Christmas trees to be taxed (initially $1 per tree), with funds going to the Christmas Tree Promotion Board. The CTPB would use the funds to advertise the benefits of real trees (as opposed to the increasingly popular plastic variety). Some producers opposed the tax, as it would increase their costs and not really benefit them. Why might a highly competitive industry need such a tax to fund advertising more than an oligopolistic industry? How might such a tax solve some of the issues of cost-sharing?
2. The NFL is used as an example for industry-wide advertising. Discuss some possible methods of cost-sharing for the 32 NFL teams, and some of the pros and cons of each.
3. How would the Lerner index of a firm influence its advertising decision? As the price the firm is able to charge increases, do you think the manager should advertise more or less?
4. If you produce a product whose benefits must be shown to the consumer by a retailer, resale price maintenance may be a solution. What are some alternatives to RPM, and what are the pros and cons of each?