The theoretical foundation of tradable permits is Coasian（Coase，1960）. However，such mechanisms are generally ascribed to Dales（Dales，1968）. In 1968 the Canadian economist Dales proposed the creation of markets for‘pollution rights’. The basic idea is that instead of fixing emission standards，government would distribute or sell‘pollution permits，corresponding to the total amount of tolerable or allowable pollution. These permits can be sold and purchased on the market，and the cost of pollution abatement will be minimized.
<<