We describe the conditional and unconditional dynamics of two coupled quant
um dots when one dot is subjected to a measurement of its occupation number
by coupling it to a third readout dot via the Coulomb interaction. The rea
dout dot is coupled to source and drain leads under weak bias, and a tunnel
current flows through a single bound state when energetically allowed. The
occupation of the quantum dot near the readout dot shifts the bound state
of the readout dot from a low conducting state to a high conducting state.
The measurement is made by continuously monitoring the tunnel current throu
gh the readout dot. We show that there is a difference between the time sca
le for the measurement-induced decoherence between the localized states of
the dots, and the time scale on which the system becomes localized due to t
he measurement.