In this paper, the issue of strategic behavior in the presence of environmental regulations and international trade is investigated. In a two-country, one-good, two-producer model as in Ulph (1996), we analyze the Nash equilibrium of the game where governments may behave strategically in...

Recently, the conventional view that stricter environmental regulations at home will affect the international competitiveness of the domestic firms negatively, has been challenged under the conditions that the regulated firms engage in innovation and that the environmental regulation is...