Question

1) Why does perfect competition, monopolistic competition, and monopoly market structures generally avoid preparing and airing commercials during the Super Bowl?

Answer 1

Under perfect competition the market is characterised by price wherein Marginal Cost = Marginal revenue, thus there are normal profits, and as the number of firms are numerous because of perfect competition they don't have enough market share and scope for increase in revenue when they air commercials as marketing is expensive. As these firms have perfect knowledge, this acts as another reason that they don't spend on advertising.

Under monopolistic competition, many firms have similar products but are not necessarily perfect substitutes, thus even if one firm tries to advertise, the other firm has to advertise, this leads to both firms spending on marketing, but the return on their investments are not high as there is intense competition to seek commercials during Super Bowl, which ultimately turns out to be too expensive.

On the other hand monopoly market structures avoid preparing and airing commercials during Super Bowl because these contracts are on long term basis, whereby the firm will have to continue to shell out more money each and every year and justify the investment with the increase in sales, but the advertisement slots are generally too expensive even for a monopoly as its performance is not going to be the same for 20 or more years, it is liable to fluctuate drastically.