Relying on a North-South model of economic geography, our paper attempts to discuss the
management of global pollution issues such as greenhouse gas emissions. As firms are
increasingly mobile, they become sensitive to differences in environmental standards across
countries and subject the regulatory power of a country to the rule of competition. In this context,
we first evaluate the consequences of a passive ecological dumping from the South. We find that
the Northern region undergoes a phenomenon of industrial relocation with a fall in its real
income. In addition, the outcomes on global pollution abatement appear ambiguous.
Globalization of the world economy, by changing the location decisions of firms, can make
global pollution even worse. This calls for international cooperation between the North and the
South. We then turn to investigate the outcomes of a harmonization of environmental policies.
Although better from an ecological point of view, this second scenario harms the South both in
terms of industrial relocation and real income.