If you did not internalize the externalities, you would buy the generic brand and save a dollar.
After all, why do you need to internalize them?
Well, businesses are very efficient and, over the long term, will choose a location less able to compel them to internalize negative externalities (or, more rarely, overly compensate them for positive externalities, as in cities offering tax breaks to businesses.)Therefore, rational-acting businesses will likely locate in areas that allow them to inflict negative externalities without requiring compensation.
The country does so to force the business to internalize externalities.