Economists generally assume that systems of transferable property rights are preferable to non-market systems. This paper suggests that the design of a market-based policy that dominates a command-and-control regime is more subtle than is commonly believed, even in theory. The subtlety arises because identical approaches to monitoring and enforcement will not generally yield the same results in different regulatory environments. The paper identifies conditions under which a kind of market dominance result obtains. The theory is then applied to the problem of trading rights to emit pollutants from motor vehicles.