This study analyzes the environmental conflict consisting of three players: a pollution factor(enterprise), a pollution victim, and a policy-maker. This analysis consists of two parts. First, when a company internalizes the expected loss from environmental conflicts with its own profit, we induce an equilibrium reimbursement rate to maximize social welfare. Second, we examine whether there is an incentive for the firm to internalize expected loss. For the first analysis, this study considers a three-stage game. In the first stage, a policy-maker formulates reimbursement rate for social welfare maximization. In the second stage, the company that recognizes reimbursement-rate determines the amount of pollution - induced output to maximize net profit taking into account expected loss. In the third stage, the company and the victim that recognize reimbursement rate and output engage in an environmental conflict. In order to analyze whether the second analysis, that is, the incentive for the firm to internalize the expected loss, we consider the situation in which the firm determines the output without considering environmental conflicts. The main conclusions of this study are as follows. First, reimbursement reduces social welfare. Second, in the non-reimbursement, the firm internalizes the expected loss to its own profit, thereby obtaining a higher net-profit and lowering the net-loss of the victim. This implies that social welfare increases when the company internalizes environmental conflict. The conclusions of this study are to support Coase Theorem.