Cigarette advertising on our nation's radio and television stations has been prohibited for more than the past three decades by federal law

What is curious about this law is that it came into being not just because of the lobbying efforts of American Medical Association but also by the tobacco industry. Use economic logic to explain this apparent paradox.

The tobacco industry has been dominated by a handful of firms for many decades and advertised heavily prior to the passage of this law. To survive, each firm responds in kind. If one firm drops out of the race, it will certainly lose out. Advertising of this sort may not increase demand for the product or improve profitability for the industry. Instead, it is often a "zero sum game"—a game in which the sum of the gains equals the sum of the losses. Tobacco company executives likely realized this "zero sum game" character of their advertising efforts and rightly understood that the only way to increase industry-wide profits would be if everyone were prevented from advertising. This could only be achieved through law.