In this paper, I established a cross-industry
pollution externality design and used the three-stage game analysis framework
to discuss the issues linked to firm output, labor union negotiation wages, and
the government’s optimal environmental tax. We show that with environmentally
oriented corporate social responsibility, the government’s optimal
environmental tax rate and firms’ residual pollution abatement level will
decrease, which is conducive to environmental protection, and the negotiated
wages of all firms will increase. With environmentally oriented corporate
social responsibility, the profits and union utility of industry firms will
increase, as will the overall consumer surplus and the social welfare level,
but there will be no effect on the profit and union utility of firms whose
productivity is reduced by pollution.
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