Market competition does not always mean better environmental performance. Just look at China and see what competition and a lack of environmental regulation has wrought.
Despite the environmental disaster that China has become, market competition can produce good results for the environment. A top example of how competition can spur environmental improvement is the battle to bring to market highly fuel efficient vehicles.
The 2015 Toyota Prius is expected to achieve a combined 55 miles per gallon, as it seeks to stay on top.
The linked to article describes further gains in engine thermal efficiency, design, materials, and manufacturing processes that Toyota is using to increase mileage, while likely lowering costs. Toyota knows that the Prius has won its status as a top seller by combining high mileage, excellent performance, and reasonable pricing.
And it knows that it must improve mileage by about 10% to stay ahead of its improving competition. Improving mileage lowers operating costs and environmental impact. Indeed, the Prius even now has a smaller carbon footprint than the all-electric Nissan Leaf, if the electricity charging the Leaf comes from predominantly coal-fired power plants.