Yes, cost was an issue, but this is F1. 😉
Michellin wanted the teams to pay more for tires in their bid proposal, as I recall, which might have helped Pirelli win the contract.
As to choosing the wrong tire, in a way I see it as no different than choosing the wrong engine or choosing (designing) the wrong aerodynamic package. Clearly Bridgestone's closeness with Ferrari created a tire tailor-made for their chassis, but the other major team choosing Michellin somewhat put themselves in a bind. If McLaren or Renault had chosen Bridgestone, as well, they probably had the clout to force Bridgestone to work with them to develop a more "balanced" tire in terms of chassis support.