This paper compares two mechanisms of price formation for risky assets from the viewpoint of insiders' welfare. In one mechanism, prices are selected by competitive market makers who receive market orders from agents possessing inside information and from liquidity-constrained traders. In the second mechanism, prices are formed according to automatic market clearing and insiders submit limit orders. Since private information exhibits decreasing returns in both cases, the comparison of expected profits will depend on the ratio between precisions of private and public information. © 1993.