I agree with you that there are legitimate reasons why the market doesn't create more 'green' products - aside from everything else, clearly superior products don't need the 'green' label to sell better - but when it comes to the specific example of banning phosphates in dish detergent we're dealing with a situation where the market was overruled by the politicians. And, oddly enough, the politicians in question all come from the same political party. Stereotypically so, in fact. Justifiably stereotypically, in double fact.
Hey, don't look at me. I voted for the other guys. And while they may be not quite libertarian enough to suit, at least they're not constitutionally ready to make you wash your dishes three times so that they can feel better...
Crossposted to Moe Lane.