The Road to Sustainable Car Mobility Policy: A Transport Economist's Guide to Marginal Cost Pricing in Denmark

This infographic provides a systematic introduction to the economics of car taxation, using Denmark as a primary case study. Drawing on marginal cost pricing theory and unit cost data from the Danish Technical University's TERESA model, it disaggregates the external costs of driving — congestion, air pollution, climate change, noise, accidents, and infrastructure wear — and compares these against existing Danish taxes across fuel types, vehicle technologies, times of day, and urban/rural contexts. The analysis finds that while average Danish car taxation appears near-adequate in aggregate, this masks significant misalignment at the margin: drivers pay approximately 49% less in taxes per additional kilometer than the marginal external cost warrants, while ownership taxes substantially overshoot their externality basis. The infographic proceeds to outline the theoretical case for GNSS-based kilometer charging as the policy instrument best suited to correcting these distortions, and addresses associated concerns around road pricing design, parking, distributional effects, and privacy. Cross-country comparisons of registration, circulation, and fuel taxes are included to situate Denmark within the European context. marginal cost pricing · externalities · Pigouvian taxation · car taxation · kilometer charging · congestion pricing · transport economics · Denmark · road pricing · GNSS · infographic