This note extends Niho's (1996) study of international income transfer and environmental quality by allowing for not only an interior Nash equilibrium but also corner solutions in his dynamic game model. It is shown that if countries sufficiently differ in resource endowments, there is a possibility of corner solutions in which the resource-poor country does not undertake cleanup activities. Moreover, in that case a transfer of resources from resource-rich country to resource-poor country deteriorate the quality of the environment. This result implies that an international income redistribution which enlarges an inequality in resource endowments improves the environmental quality.

Note