Iceland faced a problem of overfishing and witnessed their cod and herring populations nearly disappearing in the 1960s and 1970s. The overuse of a common resource like fish is often referred to as...

Iceland faced a problem of overfishing and witnessed their cod and herring populations nearly disappearing in the 1960s and 1970s. The overuse of a common resource like fish is often referred to as “The Tragedy of the Commons”.

a. Explain how fisheries exemplify the overuse of a common resource.

b. In 1983, after a failed system of limiting the number of boats that could fish in given days, the government addressed overfishing by introducing a system of “Individual Tradable Quotas (Permits)”, set by a scientific committee and allocated to each vessel. As a result, 30 years later, Iceland managed to have a healthy, growing stock of fish. Explain how this system is expected to lead to such an efficient outcome.