In PWP-033, White presents an empirical analysis of the value of a coordinated market exchange mechanism. Market trading mechanisms are a form of "market-making" institution designed to facilitate efficient exchange in markets with significant transaction costs or other trading frictions. White presents a model of efficient trading mechanisms under uncertainty, and develop a measure of the value of an interfirm trade agreement in the context of sequential `buy-versus-produce' decision-making by firms. The theory is applied to estimate the value of a formal trading institution in the California electricity market, where an interutility power pool has been proposed as a means to restructure the existing electric power industry. White develops an empirical model of the optimal production and trading decisions for an electrical utility in such a pool, and estimate state-contingent willingness-to-trade functions for each of the four major utilities in this market. With this information, he estimates the distribution of future costs that would obtain if an efficient exchange mechanism arbitraged away observed differences between willingness-to-buy and willingness-to-sell among the sample firms. The principal finding is that the simple (state-independent) bilateral contracting arrangements observed in this market allow the sample firms to achieve within 4% of the theoretical minimum expected costs, available with a complete state-contingent exchange mechanism. This difference represents an opportunity cost of approximately $250 million per year. White concludes by discussing regulatory and managerial explanations for the absence of a more efficient state-contingent trading mechanism, and implications for deregulating wholesale electric power markets.