Soft dollar brokerage is the subject of much controversy, but its practice persists. In this monograph, the authors carefully and dispassionately analyze why. Their thesis is that by understanding the underlying reasons for soft dollar use rather than simply condemning it, investment managers and government regulators can gain a new understanding of soft dollar brokerage's positive role in the economy. Horan and Johnsen present a compelling case for soft dollar brokerage as the outcome of efficient economic organization. They explore the relevant legal and economic issues and analyze two alternative hypotheses about the intended function and consequences of soft dollar brokerage. The authors conclude that when soft dollar brokerage is done properly, it helps align the incentives of portfolio managers and clients.