ABSTRACT
There are many options for ship pollution and emission control in ports. Most of these options are on a local basis, such as speed reduction, cold-iron, and emission charge. These environmental initiatives have effects at a broader scale than a port. It is important to realize that the effect of ship pollution/emission reduction can be maximized when a regional joint effort is put forward with rival ports. That is, pollution reduction schemes will become more effective, when they are implemented jointly by rival ports too. In summary, there is room for social welfare improvement when two local governments work together to decide the (coordinated) tax rate, which allows the inter-port externalities to be endogenized. That is, despite the potential competition among the ports in a region, it is important for them to coordinate their pollution control efforts, which would enhance the effectiveness of the pollution tax when an adverse externality of one port to the others exists. Such analysis can be extended to problems at a higher level, such as international cooperation on pollution control, although international ship emission management involves more complex issues.
