Overfishing in Iceland led to the cod and herring populations to almost disappear 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 during a period, 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 restore a healthy, growing stock of fish. Explain how this system could alleviate the problem and to lead to an efficient outcome.