Rent-seeking behavior of ship sulfur emission detection based on evolutionary game theory

Abstract

The “IMO 2020 sulphur limit” is an important means to promote sulfur emission reduction in shipping, and the real oil inspection report is the basis for the realization of the IMO 2020, however, shipping companies and third-party fuel testing agencies conspire to falsify the oil inspection report. Therefore, this paper establishes a three-party game model between shipping companies, third-party fuel testing agencies and maritime management agencies based on prospect theory to study rent-seeking behaviour. On this basis, this model conducts a systematic analysis of the strategy selection and conditions for evolutionary stability among the three parties, and elucidates the underlying principles driving the evolutionary trends of each entity within the shipping system. Finally, a simulation analysis is conducted based on a real-world case of a ship's fuel sulfur emissions exceeding the standard to make suggestions for the maritime management agencies. The results show that:1) When shipping companies and maritime regulatory authorities exhibit a heightened awareness of risk aversion, they are inclined to refrain from adopting strategies that could entail potential risks, even if such strategies may yield substantial short-term gains.2) The price differential between high-sulfur and low-sulfur fuels constitutes a critical determinant influencing the decision-making processes of shipping companies. Additionally, factors such as the potential loss of corporate reputation, the likelihood of crew members actively reporting violations, and the implementation of a punitive feedback mechanism influence the degree to which shipping companies adhere to standardized operational practices.3) Testing cost represents a pivotal factor influencing the operations of third-party testing institutions.4) The choice of Maritime management agency is related to the cost of strict regulation, the fines by higher governmental authorities and environmental governance cost, and these factors exhibit distinct thresholds.