The article compares two types of markets: one where traders bid in auctions and another where market makers can trade with each other separately. In the second type, market makers adjust their asset holdings to manage risk, which affects prices for outside investors. The price at which market makers trade with each other influences the prices offered to outside investors. When market makers and speculators are not in perfect competition and there is not too much delay between customer orders and inter-dealer trades, investors can get better prices in the market where market makers trade with each other.