In our world today, we have many things which differ between societies but one thing which holds constant is humans have to be able to travel. But why has it evolved that some societies drive on the right side of the road and others on the left side? It turns out that just about two-thirds of the world drives on the right side of the road. In the past most everyone traveled on the left-side of the road. Reason being, most people are right handed. Back in feudal times, a right handed swordsman preferred to keep his scabbard on his left side and also mounted horses from the left due to this. Travel from the left side of the road would be easier because of the lowered risk of being hit while mounting, as well as keeping the his scabbard out of the way of traffic. This being said, it does not give attribute to the reasons why most of the world drives on the right side of the road. This can be traced back to the late 1700′s where people first began hauling large farm products on huge wagons which were pulled by horses. These huge wagons did not have places for the driver to sit, so being forced to sit on the horses he chose the left rear horse so he kept his right hand free to lash the team. Since he was sitting on the left side he preferred everyone to pass on his left so that he could keep his eye on the wagon wheels, therefore he would drive on the right side of the road.
At this point, road systems begin to work efficiently so that they are performing in a way that generates the maximum desired output for given inputs with available technology. These societies evolved to give a higher output with the same inputs, more or less giving the large wagons the right of way. By doing this, the transaction costs are reduced which would have been affected by any hardships and costs incurred while traveling. The Coase Theorem, states that when trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. Meaning that if a government decides not to adopt driving on the right side a negative externality that exists, the costs of transportation is higher. These costs will be passed on to the customers, giving them greater incentive to home produce, which in turn gives the government less of a chance to gain tax dollars. Therefore, both parties benefit without transaction cost leading to efficiency.
