Abstract: In the mixed oligopoly market including state-owned enterprises and private enterprises,the optimal production and pollution control R&D investment decisions made by state-owned enterprises and private enterprises are analyzed when facing the environmental regulation in the form of environmental tax policy. The results show that when enterprises only focus on production decision-making, with no pollution control R&D investment decisions, both state-owned enterprises and private enterprises are to reduce the total production in the face of environmental tax policy, leading to private enterprises are at a disadvantage in the market, but the strengthening of environmental regulation will cut the production advantage of state-owned enterprises in the market; when enterprises make production decision as well as pollution control R&D investment decision, the environmental regulation policy of the government will suppress private enterprises′ production, while pollution control R&D investment increases firstly and then decreases, showing the inverted “U”-shaped trend, but the state-owned enterprises not only increase the output of products, but also strengthen pollution control R&D investment, showing environmental regulation is more conducive to the production of state-owned enterprises, and increasing its investment in pollution control R&D; when state-owned and private enterprises are facing environmental regulation, whether to carry out pollution control R&D investment or not is affected not only by the strength of environmental regulation, but also by the degree of market freedom. Government should grasp the intensity of environmental regulation according to the heterogeneity of enterprises in different industries, and implement the supporting policies to promote enterprises to make investment decisions of taking pollution control into consideration.

Key words: environmental regulation, mixed oligopoly, pollution control R&D, heterogeneous enterprise