Regulation is often funded with fees paid by regulated firms, potentially creating incentive problems. We use this feature to study the incentives of regulators and their ability to affect firm behavior. Theoretically, we show that firms that pay higher fees may face more lenient regulation,...

This paper investigates a model of endogenous product differentiation in subprime lending markets. In the subprime literature the discussion surrounds two competing hypotheses about pricing behavior. The opportunity pricing hypothesis suggests that lenders are rent seeking in their pricing...