If a company is not paying the true cost of the pollution they produce, then they may well be selling their product cheaper than they otherwise would, and thereby selling more of it.
However the amount they sell isn’t the thing causing a problem for society. It is just a symptom. In this case, you can’t fix the root problem just by treating the symptom.
The problem is that the profits of the company are not correctly tied to the problems they cause, and they therefore have insufficient incentive to invest in ways of reducing the problems (by, for example, buying a different raw material that is slightly more expensive, but far less polluting).
Other factors causing them to reduce production or increase the price they charge customers won’t get them to change their behaviour on which raw material they buy.
If a company is not paying the true cost of the pollution they produce, then they may well be selling their product cheaper than they otherwise would, and thereby selling more of it.
However the amount they sell isn’t the thing causing a problem for society. It is just a symptom. In this case, you can’t fix the root problem just by treating the symptom.
The problem is that the profits of the company are not correctly tied to the problems they cause, and they therefore have insufficient incentive to invest in ways of reducing the problems (by, for example, buying a different raw material that is slightly more expensive, but far less polluting).
Other factors causing them to reduce production or increase the price they charge customers won’t get them to change their behaviour on which raw material they buy.
(For clarity: yes, I know I’m ignoring that increased production is magnifying the effect of the pollution per item.)