Consider the shipping container (the large box that stacks on cargo ships and attaches to trucks). If all containers are the same size and design, then the container can pass seamlessly between ships, trains, trucks, and cranes along the way. Today, the standard dimensions are 8 feet wide, 8.5 feet tall, and 40 feet long. Let’s see how this standard dimension illustrates the meaning of "Nash equilibrium."
a. Suppose an inventor created a new shipping container that was slightly cheaper to make, as well as stronger, but it had to be 41 feet long.
Keeping the idea of standardization in mind, would this inventor be successful? Why or why not?
1-The inventor would be successful; shipping firms, attracted to the lower cost, would switch over their equipment and buy the new containers.
2-The inventor would be successful; other shipping companies may not buy the containers, but the inventor can successfully enter the intermodal shipping market using equipment specially designed for the new, lower-cost containers.
3-The inventor would not be successful; incumbent manufacturers of the old 40-foot containers would lower prices to keep out the competitor.
4-The inventor would not be successful; the minor cost savings and strength boost would not justify the switching costs associated with refitting ships, trains, trucks, and cranes to work with 41-foot containers.
