To entertain the idea of tradable quotas as a solution to an externality problem requires a leap of insight. It's not easy and you have to convince others your crazy idea is right. Consider the transcript below from Edmund W. Kitch, "The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932-1970," _The Journal of Law and Economics_, vol. 26, No. 1, Apr 1983, pp. 163-234. Available from JSTOR. COASE: I think he [Reuben Kessel] was the one who pressed hard for excluding it. That doesn't much matter. The fact is that there were these intimations to me that my views were wrong. George then asked me if I'd come and give a paper or present something at the Industrial Organization workshop. I said I'd come along if I could also on some occasion present my views on this other question. Aaron assembled a group of people at his home. George and Milton were there, Reuben was there, McGee was there. DIRECTOR: Lloyd.Mintz was there, I think. Gregg Louis was there. MCGEE: Arnold Harberger was there. COASE: I can't remember everybody. I presented my views there and I had a very difficult time with Milton. He grilled me for half an hour or more, but when I was still standing at the end of that I felt I was home. STIGLER: The seminar was one of the most exciting intellectual events of my life. When, in 1960, he wrote to Chicago and said, "OK, I'll give a dull workshop if you'll let me talk about why the passage in my FCC article was not wrong," that was arranged. It was a compliment to you, Aaron, that a group of really quite remarkable analytical powers formed at the time. As Ronald says, it contained Aaron, Milton, John McGee, Gregg Louis, Reuben Kessel, Al Harberger, Martin Bailey. It was a collection of theorists who were simply superb. At the beginning of the evening we took a vote and there were twenty votes for Pigou and one for Ronald, and if Ronald had not been allowed to vote it would have been even more one-sided. The discussion began. As usual, Milton did much of the talking. I think it is also fair to say that, as usual, Milton did much of the correct and deep and analytical thinking. I cannot reconstruct it. I have never really forgiven Aaron for not having brought a tape recorder that night. He should have known this was going to be a great event because he is a wise man. My recollection is that Ronald didn't persuade us. But he refused to yield to all our erroneous arguments. Milton would hit him from one side, then from another, then from another. Then to our horror, Milton missed him and hit us. At the end of that evening the vote had changed. There were twenty-one votes for Ronald and no votes for Pigou. So, why didn't Sidgwick propose cap-and-trade in 1883? Because that was way out of his world view. He had no language for this solution and no way to explain it. Knight was very close in 1926, but it would take Coase in 1960 to offer property rights as an alternative to top-down regulation. And several decades more to implement it. To expect Sidgwick to be that creative seems to me a bit much to ask. Humberto Barreto