Explain how the basic concept of marketable permits or 'cap-and-trade" can be applied to regulate fisheries and air pollution emissions. Specific examples of cap-and-trade applications can be used in your answer.

• What is the meaning of a 'cap' in the context of regulating a fishery and an air pollutant?
• How would a regulator's objective in setting a cap be different for a fishery compared to an air pollutant?
• What determines whether permits will be traded in the fishery or for the air pollutant and does it matter if there are restrictions on the type/ number of trades that can occur?
• How would potential future changes in the cap influence the price of permits and the viability of the permit market?