  We use an evolutionary game model to study the interplay between corporate
environmental compliance and enforcement promoted by the policy maker in a
country facing a pollution trap, i.e., a scenario in which the vast majority of
firms do not internalize their pollution negative externality and auditors do
not inspect firms. The game conflict is due to the trade-off in which firms are
better-off when they pollute and are not inspected, while social welfare is
maximized when auditors do not need to inspect socially responsible
corporations that account for pollution in their production decisions regarding
technology used and emission level. Starting with a well-mixed two-population
game model, there is no long-run equilibrium and the shares of polluters and
shirking auditors keep oscillating over time. In contrast, when firms and
auditors are allocated in a spatial network, the game displays a rich dynamics
depending on the inspecting cost. While the oscillatory behaviour is still
possible, there is a set of parameters for which a long run robust equilibrium
is achieved with the country leaving the pollution trap. On the other hand, an
excessively high inspection cost leads to an ineffective auditing process where
the few compliant firms are driven out of the country.
