The paper is an inquiry into the circumstances under which the voluntary provision of public goods might be sensible from a firms point of view. To shed light on the question, the paper draws on industrial organization theory, price theory, and the theory of the firm, and on case-based clinical research.

In a world where environmental externalities are the only departure from the assumptions of perfect competition, firms that volunteer to internalize costs cannot survive. In a world in which externalities coexist with other departures from the competitive paradigm (impacted information or oligopoly competition, for example), the latitude for managerial discretion is much greater. In particular, firms may find it in their shareholders interests to provide environmental public goods to a greater degree than that required by law. A number of firms, especially in Europe and North America, assert that they are pursuing such "beyond-compliance" strategies. The decision whether to pursue such strategies should depend, inter alia, on the structure of the firms industry, its competitive position with that structure, and its internal organizational capabilities.

The paper presents a typology of such strategies. It discusses the ways in which a firms chances of success in pursuing any one of them are influenced by the firms market position and organizational capabilities and by the basic structure of the industry in which it competes.

Most environmental economics is appropriately rooted in welfare economics,and seeks, from a normative perspective, to inform debates about public policy. This paper is intended to complement this mainstream work by helping to develop a richer understanding of private environmental policy, rooted in industrial organization and the theory of the firm.