In this regard, while economic theory tells us that carbon pricing could provide incentives to implement this strategy, whether this will occur in a particular setting remains an empirical question. Existing empirical research on the effect of the introduction of more stringent sulfur regulation in Emission Control Areas (ECAs) on vessels’ speed indicates that this avoidance strategy is not necessarily economically viable on a large scale.<sup>112</sup> These studies found that the introduction of ECAs did not trigger statistically significant behavioral changes in vessel speed.<sup>113</sup> This literature provides some hints that this avoidance strategy would not be widely implemented under a _first/last vessel measure_ or a _time-based measure._ Many of the strategies available under a first/last vessel measure would also be available under a time-based measure.<sup>114</sup> Under this scheme, carbon price avoidance could take place through: i) falsification of documents; ii) relocation of vessels such that the less polluting ships call at ports in the implementing state, while the overall stock of ships remains unchanged;<sup>115</sup> iii) changes in speed inside and outside the covered areas;<sup>116</sup> and iv) reduction of number of vessels calling at ports that impose the measure. Note that the economic feasibility of this last strategy depends on the costs of (re)loading cargoes.<sup>117</sup> Most of the avoidance strategies described here would not be available under a _holistic route cargo measure._ For this type of measure, avoidance strategies are confined mainly to falsification of documents<sup>118</sup> and, for outbound voyages, making changes to cargo consignees en route. As above, possible ways to obtain data on changes in cargo consignees for vessels that repeatedly call at the ports of the implementing state are: i) AIS data; and ii) a top-down MRV system that requires vessels to report changes to cargo consignees on previous voyages. Alternatively, the voluntary MRV system described in the previous section could also provide the necessary data, at least in situations in which: i) the cargo is transported by three or more vessel owners that compete on some routes; and ii) non-reported en-route changes in consignee are punished and reported ones are rewarded. This is because a voluntary MRV designed in this way can create a ‘prisoner dilemma’-type game.

In its simplest form, a prisoner dilemma game describes the situation in which two entities face the choice of whether to cooperate or defect. Cooperation yields a pay-off X if the other player cooperates or Y if the other player defects. Defection leads to a pay-off Z if the other player cooperates and Q in case of defection. Here, Z ˃ X ˃ 0 and Q ˃ Y, therefore defection is a dominant strategy.

Imagine three vessels (A, B and C) that belong to three different vessel owners which compete on some trade routes. Vessel A transports a cargo from a port that implements carbon pricing. To avoid a higher price signal, it declares that the cargo will be delivered to a nearby port. Once having left the first port, the consignee of the cargo changes to a (previously determined) more distant one. To deliver the cargo to the new consignee after transporting the cargo for a longer distance than the one declared to the port authorities, A has to transfer possession of the cargo to B, which will subsequently transfer it to C, which will cover the last segment of the voyage.<sup>119</sup> In this situation, A,

> 112 Schaumeier, et al. (2015); Adland et al. (2017).

> 113 Schaumeier et al. (2015, p. 14); Adland et al. (2017, p. 45).

> 114 Kollamthodi (2013, p. 52).

> 115 Bäuerle et al. (2010, pp. 56-57).

> 116 Kollamthodi, (2013, p. 52).

> 117 To illustrate, imagine that, to reduce the costs of carbon pricing, a transport company decides to reload the cargoes transported from three different ports to the state that implements the measure on one vessel that covers only a small fraction of the overall distance from the three ports. Moving the cargoes from every vessel on to the one calling at the port that implements the measure will impose costs on the transport company, for instance, in terms of the opportunity costs related to the extra time needed to move the cargoes from one vessel to another.

118 Bäuerle et al. (2010, p. 61).

> 119 Note that the number of vessel owners involved in transporting a cargo can be larger than three, and may also unexpectedly increase en route if, for instance, the cargo is sold and re-sold multiple times throughout the voyage.

13