An Investigation of Liability and the Oil Tanker Market Open Access
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This dissertation consists of three essays on two separate but related topics pertaining to oil tankers. The first two essays focus on how the threat of liability for oil spills effects the organizational decisions of oil companies, while the third explores the drivers of oil tanker ownership across countries. The first essay presents a theoretical model of an oil company's decision to use its own tanker to transport its oil, as opposed to contracting with a shipping company. The model was motivated by the fact that the current theoretical models of liability in the economic literature omit many of the important elements of the liability regime for oil spills. Several testable predictions are derived from the model.The second essay empirically tests two of the predictions of the theoretical model by using data on US port-calls by oil tankers and exploiting the variation in oil spill liability laws across US states. The results of these empirical tests suggest that tankers owned by major oil companies are more likely than other tankers to call on ports that extend liability for oil spills from the owners of the tankers to the owners of the cargo, as predicted by the theoretical model. This empirical finding contributes to the economic literature on liability by providing evidence that the imposition of extended liability can cause large firms to undertake potentially hazardous activities internally, where they can, in principle, directly control the level of preventative care.The third essay provides an analysis of the ownership structure of the international tanker fleet and how it has changed since the passage of the Oil Pollution Act of 1990. The empirical findings of the third essay suggest that the drivers of tanker ownership at the national level are strongly influenced by the government's role in the sector.
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