Economic literature on international trade identifies the sources of comparative advantage like endowments and technology that drive international trade and result in gains from trade. Comparative advantage is however also affected by environmental standards. Stricter environmental standards are commonly believed to erode an existing comparative advantage of developing countries and hence result in lower gains from trade. Based on this popular belief, developing economies might legislate weak environmental standards or fail to enforce existing standards in the hope of encouraging “dirty” industries. My essays take a more sophisticated look at the trade and environment relation and find that the relation between welfare gains from trade and environmental quality is not one of simple trade-off of one against the other as popularly believed
