Market microstructure matters when imposing a Tobin tax-Evidence from the lab

► Using laboratory experiments we test the impact of a Tobin tax in two different market microstructures. ► We find that in markets without market makers an unilaterally imposed Tobin tax (i.e., a tax haven exists) increases volatility. ► In contrast, in markets with market makers we observe a decrease in volatility in unilaterally-taxed markets. ► An encompassing Tobin tax has no impact on volatility in either setting. ► Efficiency does not vary significantly across tax regimes.