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This paper examines the environmental policy of governments in a market where a semi-public firm competes with a private firm. According to the private firm nationality (domestic or foreign), we analyse the influence of strategic managerial delegation upon the pollution tax. We show that the environmental policy is more stringent with a domestic private firm. We also show that the optimal emission tax is always higher in the presence of delegation, regardless of private firm’s nationality. Finally, governments can use environmental policy as a substitute for public firm privatization. Classification JEL : L13, L33, Q58, D21.