Abstract
By addressing environmental protection in the context of intra-industry trade, this paper offers a new perspective on the trade and environment debate. Empirical evidence has long suggested that an increasing share of international trade takes the form of intra- rather than inter-industry trade. Thus, it is essential to discuss the likely impact of trade on the environmental quality in the context of two-way trade. Using a simple intra-industry trade model a la Brander and Krugman (1983), this essay shows that environmental consequences of trade liberalization differ significantly when oligopolistic rivalry rather than comparative advantage drives international trade.
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