This paper proposes a strategic model of pollution control. A firm, representative

of the productive sector of a country, aims at maximizing its profits by expanding its production.

Assuming that the output of production is proportional to the level of pollutants' emissions, the

firm increases the level of pollution. The government of the country aims at minimizing the social

costs due to the pollution, and introduces regulatory constraints on the emissions' level, which

then effectively cap the output of production. Supposing that the firm and the government face

both proportional and fixed costs in order to adopt their policies, we model the previous problem

as a stochastic impulse two-person nonzero-sum game. The state variable of the game is the level

of the output of production which evolves as a general linearly controlled one-dimensional Itô-diffusion. Following an educated guess, we first construct a pair of candidate equilibrium policies

and of corresponding equilibrium values, and we then provide a set of sufficient conditions under

which they indeed realize an equilibrium. Our results are complemented by a numerical study

when the (uncontrolled) output of production evolves as a geometric Brownian motion, and

the firm's operating prot and the government's running cost functions are of power type. An

analysis of the dependency of the equilibrium policies and values on the model parameters yields

interesting new behaviors that we explain as a consequence of the strategic interaction between

the firm and the government.