I don't think it's a cost thing. We're talking about the the brakes on Mercedes, Porche, Audi etc. I doubt that they are using cheaper brake pads than say... Toyota or Honda.

I spend 6 years in Germany (1974 - 1977 and 1979 - 1982) and German cars have always had very soft brake pads. Even my 1969 BMW 2002 turbo-tap had the brake dust problem until I installed a harder pad. Back then you had to use Metalic pads and linnings to get away from the dust. The biggest problem with metalic pads and linnings is that they were very tough on your rotors and drums.