It is well known that transformation efficiency decreases by addition of excess amounts of plasmid. I would like to know the molecular mechanism. What factors do you think affect it?
You run out of cells. Or in other words, you end up putting multiple plasmid molecules into each cell. The mechanism is purely statistical distribution. You can even calculate it, if you count the number of cells available by plating without selection, and do the math to figure out how many plasmid molecules you've got.
You can affect it by packing more cells (at greater density) into your competent cells preparation. That will of course work only for so long. I think it's one of the reasons that electrocompetent cells are so much more efficient than chemically competent cells -- you can pack them more densely, by a considerable factor.