| Abstract: |
| We develop a continuous time mean field model of an exhaustible resource extracted by a continuum of heterogeneous price taking firms under aggregate uncertainty, where the market price is determined endogenously by the aggregate outcome and a regulator sets a time dependent tax or subsidy. We formulate the regulator`s problem as a stochastic control problem over the evolving distribution of extractors, prove existence and uniqueness of an optimal policy, and establish qualitative properties of the regulator`s value function and optimal control. We then provide comparative statics for key primitives and complement the theory with numerical results illustrating equilibrium dynamics and the optimal regulatory policy. |
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