[Klinky]

This assumes perfect information for the consumer. Most capitalist wouldn't advertise they use child labor even if they did. Sweep it under the rug, and focus on the marketing budget instead. Then many consumers are apathetic to a lot of things, they may not care enough that some children they never knew died. Relying on the invisible hand to affect social change often results in invisible results, because the results don't actually exist.

[bluGill]

In the case of child/slave labor the topic is sensitive enough that it isn't worth sweeping under the rug because the risk is too great. If you do "sweep it under the rug" a large part of your efforts is ensuring the children working for you have a better life than those not (education and medical care) which costs a lot of money. That is you assume you will be caught and try to present yourself in the best light anyway.

[Klinky]

The risk is too great? What risk exactly? The risk of becoming a trillion dollar company? Does every iPhone, Galaxy Android device or new laptop have a sticker on them that says "Product may have used child labor at some point in supply chain" in big bold letters? Will these companies triumphantly announce how their product now results in only 1 child death per year instead of 2 at some big keynote product launch event? No. Maybe they'll investigate after being called out and put it in some report that barely any consumers care to read.

If you sampled 100 smartphone users on the street about cobalt procurement practices, would they be surprised by what they hear? If you tracked those 100 people, how many would change their behavior(i.e. give up their smartphone) after hearing about it?