We develop a tractable model of a limit order market where informed and liquidity investors compete with a professional liquidity provider who has a monitoring advantage. We apply our model to study the impact of exogenous transaction costs and investor patience on trading activity and market quality. Without exogenous transaction costs, the relative submission rates of market orders to limit orders, price efficiency, and welfare are invariant in the liquidity cross-section. Faced with exogenous transaction costs, investor order aggressiveness and participation falls. Market quality, price efficiency, and welfare also decline. An increase in investor patience has a similar effect.