Author(s)

Ting-Chung Tsai¹, Shih-Shen Chen², Yi-Shan Lu³, Chu-Chuan Hsu^4*, Jen-Yao Lee⁵

¹National Kaohsiung University of Science and Technology, Chinese Taipei.
²Department of International Business and Trade, Shu-Te University, Chinese Taipei.
³Management School, Kunming University of Science and Technology, Kunming, China.
⁴Department of Marketing and Logistics Management, YuDa University of Science and Technology, Chinese Taipei.
⁵National Kaohsiung University of Science and Technology, Chinese Taipei.

In this paper, we first show that if the firm’s production leads to environmental damage and the government does not implement any environmental policy by using a two-stage game model, the “excess-entry” theorem holds. We then show that entry can be socially insufficient in the presence of production externality and policy mix is needed for pollution control in oligopoly industry with endogenous market structure. Hence, the anti-competitive entry regulation policy suggested by the “excess-entry” theorem does not always hold.

Pollution, Environment, Emission Tax, Social Efficiency

Tsai, T. , Chen, S. , Lu, Y. , Hsu, C. and Lee, J. (2019) Environmental Policy and Social Efficiency under Free Entry. Modern Economy, 10, 2110-2119. doi: 10.4236/me.2019.109132.