Formation of Cartels in Large Markets
Sergiu Hart
Abstract
The von Neumann  Morgenstern concept of solution is applied to nonatomic
pure exchange markets consisting of a finite number of different types of
trader, initially owning disjoint sets of goods. It is proved that if all
traders of each type form a cartel and behave like a single (atomic) trader
(their "representative"), then one gets solutions of the original market from
those of the finite market of the representatives, and all
solutions are obtained in this manner  i.e., the market must
organize itself in cartels, and this will indeed be stable.

Journal of Economic Theory 7 (1974), 4, 453466