Signature of Author...............................

This thesis describes the role of short sea shipping within the transportation network in the European Union. It examines the existence of externalities relating to congestion, infrastructure, air pollution, noise, and accidents in the transportation sector. It evaluates the level of these externalities and also their effects on the Community. It then explains current attempts to internalize these factors, or incorporate them into the cost of transportation that the user pays. It concludes that current efforts are lacking and do not produce the most beneficial situation for the citizens of Europe. Consequently, the thesis investigates other possible methods of internalization that may produce more advantageous results and analyzes their possible effects on the transportation sector. The value of short sea shipping is examined in regards to the previously mentioned externalities. It concludes that, with the exception of the emission of sulfur dioxide