This paper explores the determination of an optimal value of preassignedpermit when polluting firms strategically choose their location. Thecomposition of industry under the tradable permit system could be different bythe value of preassigned permit. The results of this paper are summarized asfollows. First, the social welfare of the tradable permit system implementingcountry is maximized when the bigger industry is located in the country while,the smaller industry is relocated to another country. Next, the social welfareof the country could be maximized by encouraging within industry competitionfor the permit rather than between industry competition.