This paper examines the impact of environmental regulation on innovation and international competitiveness, testing the weak, narrow, and strong versions of Porter’s hypotheses. The authors use the OECD Environmental Stringency Policy Index to measure green policies and apply a simultaneous-equation model to analyze the direct and indirect effects of regulation on exports and innovation. The results support the weak and strong versions of Porter’s hypotheses, indicating that the positive impact of regulation on innovation and exports increases with a country’s pollution intensity. This suggests that green policies can foster both sustainability and international competitiveness if properly coordinated. The study also highlights the moderating role of pollution intensity, showing that the effectiveness of green policies increases with higher pollution levels. The findings have significant policy implications, emphasizing the need for a holistic approach to green policies and international cooperation to achieve sustainable and competitive outcomes.This paper examines the impact of environmental regulation on innovation and international competitiveness, testing the weak, narrow, and strong versions of Porter’s hypotheses. The authors use the OECD Environmental Stringency Policy Index to measure green policies and apply a simultaneous-equation model to analyze the direct and indirect effects of regulation on exports and innovation. The results support the weak and strong versions of Porter’s hypotheses, indicating that the positive impact of regulation on innovation and exports increases with a country’s pollution intensity. This suggests that green policies can foster both sustainability and international competitiveness if properly coordinated. The study also highlights the moderating role of pollution intensity, showing that the effectiveness of green policies increases with higher pollution levels. The findings have significant policy implications, emphasizing the need for a holistic approach to green policies and international cooperation to achieve sustainable and competitive outcomes.