Flag of convenience and the tragedy of the commons in maritime transportation

Flag of convenience (FOC) refers to the practice of registering ships in foreign countries to benefit from lax regulations. While FOC offers several short-term cost advantages to ship owners and FOC countries, it poses significant threats to critical international interests, including environmental protection and marine habitat preservation. Despite global outrage and concerns over FOC's environmental impact, the number of FOC ships have continued to rise. Using game theory, we illustrate how individual rationality – opting for FOC to maximize economic benefits – leads to adverse outcomes for the common good, resulting in increased marine pollution, that we refer to as the tragedy of the commons. Our findings have implications for understanding the strategic behaviour of key players in the maritime transportation, revealing the dark side of globalization and stressing the need for stronger international cooperation to shift these behaviours.