We use a simple two-country oligopoly model of intra-industry trade to examine the implications of foreign direct investment for the pollution haven hypothesis and environmental policy. Countries which lower environmental standards to be more competitive in world markets generate pollution...

We explore the relationship between Free Trade Agreements (FTAs) and environmental policy, and the implications of negotiating environmental policy in trade agreements. Without the inclusion of domestic instrument restrictions, countries can alter environmental policy in order to influence the...