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Strategic Naval Inspection for Port Safety and Security

Both risk externalities and moral hazard have conjured to induce risks of substantial consequences. These require both complex and creative regulation as well as control to inspect and prevent potential perpetrators. Sovereign maritime and port responsibilities are affected by such problems including for example, sea pollution by ships, terrorist attacks on ship lanes as well as ship owners seeking to bypass ports regulations. For this reason the control of both ship lanes and ports has become increasingly acute. The purpose of this paper is to outline “a random payoffs game-theoretical framework” for naval and ship inspections that enter a port such as New York or Hong Kong. Based on the problems results we discuss the effects and the implication of inspection cost and their derivatives. A number of examples are used to highlight some essential results. Extensions and conclusions for the inspection of potentially non-complying ship operators to regulation and sub-standard performance are also discussed to provide areas of further research.