In the context of global tightening of environmental regulations, the question of their effectiveness and potential negative consequences, such as the «green paradox» (where environmental policies lead to short-term increases in pollution), remains relevant. This study analyzes the impact of environmental regulation on greenhouse gas emissions and the competitive positions of multinational corporations (MNCs) using panel data from 2000-2020, cross-country input-output tables (OECD Greenhouse Gas Footprint Indicators, Analytical Activities of MNEs (AAMNE)), and environmental policy database (PINE Database). The results confirm the nonlinear nature of the relationship between regulatory rigor and emissions levels, depending on the economic development of the country and industry specifics. It is noteworthy that the effect of the «green paradox» is observed in developed countries when applying taxes, and in developing countries when using fines. Testing of the «pollution halo» and «pollution harbor» hypotheses has shown that MNCs gain a competitive advantage in a highly regulated environment, especially in the manufacturing industry, where their technological superiority offsets costs. However, all sectors of the economy are already showing signs of a «green paradox» associated with suboptimal design of measures or short-term adaptation costs. The study highlights the need for a differentiated approach to environmental regulation, taking into account industry specifics and risks for local enterprises.