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Abstract
Flag selection is not just a crucial decision with regard to ship operation, but also plays an important role in national and international maritime policy. This study uses individual ship registration data to analyse flag selection behaviour, including flagging out decision using a binary choice model, and final flag choice by applying a nested logit model. Operators from traditional maritime countries are found to flag out high-quality vessels, whereas those from open-registry countries tend to flag out low-quality ones. Flag preferences are more sensitive to the registration fee than to the annual due; full-open flags are more elastic than quasi-open ones and substitution among flags within the same group is higher than across different groups. Port State Control, Flag State Control and safety records have opposite impacts on flag choice for ships from closed registry countries and those from open registers.
Acknowledgements
We are thankful to the editor and three anonymous reviewers for their constructive comments and suggestions which helped to improve both the contents and organisation of this article. This work is supported by Hong Kong Polytechnic University's grant (RGC No.: Polyu5473/10H) and the niche area development project (J-BB7C).
Notes
Notes
www.jrj.com, Feb. 25, 2009
MoU stands for Memorandum of Understanding. These two MoUs are the agreements among maritime administrations in Asia and Europe regarding the inspection of foreign-flagged vessels calling at their ports according to international conventions. The USA is not a member country of the PSC.
The two numbers in the square brackets are the log-likelihood values. The first one is from the conditional logit model, while the second one is from the nested logit one.