1. The document introduces cap-and-trade as a market-based climate policy where a government sets a cap that limits total pollution and distributes permits that can be traded. 2. It uses a "musical chairs" analogy to illustrate how a cap-and-trade system works, with the number of chairs representing the available pollution permits. 3. Under a cap-and-trade system, the cap is reduced over time to achieve emission reduction targets, and the price of permits rises as they become more scarce, incentivizing pollution cuts.