Sounds like a coordination problem with a first-mover disadvantage. It's in the best interest of each individual company to keep profits coming back to improve the business and it's competitiveness, rather than earmarking some for philanthropy and community outreach. The first company to do so would suffer while the others continue improving their business.
This is exactly why it's a problem to solve at the government level; a higher authority, with teeth, is needed to solve these coordination problems and force market participants to all do the right thing.
This is exactly why it's a problem to solve at the government level; a higher authority, with teeth, is needed to solve these coordination problems and force market participants to all do the right thing.