Tax haven, pollution haven or both?

This paper studies the interplay between two groups of countries, large and small, which compete sequentially on corporate taxes environmental regulations to attract imperfectly mobile firms. We show that in general, small countries undercut terms taxes. The choose be both tax pollution havens when they are less concerned about environment than capital integration is low. never act as havens. Finally, we find higher firm mobility narrows gap but does not affect optimal policy: competition immunizes against detrimental effect globalization emission caps.