In a linear oligopoly model with antitrust enforcement, the optimal cartel price converges to the competitive equilibrium price. The set of sustainable cartel prices does not shrink to the competitive price. We identify necessary conditions for this counter-intuitive convergence result.

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Economics Letters
Erasmus School of Economics

Houba, H., Motchenkova, E., & Wen, Q. L. (2012). Competitive prices as optimal cartel prices. Economics Letters, 114(1), 39–42. doi:10.1016/j.econlet.2011.08.021