The two sides of the coin of externality in road transport

The development of models of road transport externalities has been driven by the need to capture the broad spectrum of road transport's adverse societal and environmental effects. Externalities, introduced by economist Arthur Pigou in the early 20th century, refer to the unintended side effects of economic activities, such as pollution and congestion, which can be mitigated through taxes and subsidies. Recent models emphasise sustainable transport solutions, such as public transport, electric vehicles, and non-motorised options, aiming to reduce carbon emissions, improve air quality, and enhance urban livability.