Would your "free market" also mean that the people living in the suburbs pay the true cost of living in suburbs? Including higher taxes to offset the higher infrastructure costs and the higher impact on the environment?
For example, urban centers are net importers (of food, processed goods, building materials, etc.), and benefit disproportionately from heavy freight on roads.
An example of a serious but less obvious negative externality imposed by urban centers is the bulk import of population, since urban centers always reproduce below replacement rate. The urban centers basically take most of the intelligent people from non-urban areas and then ensure they don't reproduce.
Cities also rely on roads, just in a different way; they require road networks to bring them food and manufactured goods, transported at greater distances than similar products in rural areas.
By exponential, I meant when you increase the distance between them, you multiply everything consumed by an extra factor. More pipe for water and sewer and gas, more wire for electricity, more road for more intersections and wider roads, more miles driven for garbage trucks, more schools, it has a knock on effect of all consumption.
And it’s just as simple as that - the more you consume, the more you pollute. The more you consume space, the more you consume everything since the further everything has to get pushed (assuming you’re still expecting all the trappings of modern life). I am guessing that the extra space I am consuming now is probably a luxury that future generations won’t have, assuming population levels of people who live an American lifestyle hold steady or rise.
Isn't it mainly tied to "density"? All other parameters being equal consuming only local resources at a rate which doesn't extinguish them solves the equation. On the pollution side of this: even if is is strictly the same (quantitatively and qualitatively) aren't natural surroundings more able to cope with it ("digest") if produced on a larger area, more sparsely, somehow diffusing the load?
We may, however, be unable or unwilling to adequately reduce our expectations.
You can't just make up "externalities" for something you dislike; I guarantee you, anything you like has lots of "externalities" as well that may cancel out whatever you're trying to charge someone else for things they like.
Gas taxes, tolls, and other user fees pay far more of the total expenditure on roads than transit fares pay for their infrastructure and operating costs. Be careful what you wish for, you may not like what you get.
The issue with cars is that it is impossible to build enough roads. The more you build the more convenient it becomes so more people drive etc. And of course the other externality of carbon pollution.