Environmental regulations can impact how companies compete in global markets. When firms compete in quantities, stronger commercial policies are needed under environmental regulations to maximize welfare. However, when competition is in prices, weaker policies are more effective. The strategic use of environmental policies can involve weakening them in some cases and strengthening them in others. The study shows that the outcome of environmental regulations depends on how they are determined and that under price competition, environmental regulations can actually improve welfare without the need for commercial policies. This means that optimal policies may not always involve export taxes but could include export subsidies or free trade under certain conditions.