Should Diamonds Cost so Much? Essay

For centuries, diamonds have been regarded as one of the most valuable commodities in the world and the industry has evolved into billions of dollars. At the top, De Beers dominated the entire industry worldwide, from exploration to retail selling. However, it has a reputation of a monopolist, where it influences supply and demand. The two critical factors that De Beers carefully maintained throughout the century to remain in monopoly was to create the illusion of the scarcity of the diamonds and to keep the prices high. Realizing the benefits of the cooperation and the dangers of the oversupply, most

How many natural diamonds are for sale at the moment? Note the wide array of sizes and prices of the diamonds. In what sense is there competition among the sellers in this market? How does that competition influence prices? In what sense is there competition among buyers? How does that competition influence prices?

The economic principals discussed in this article are mainly focused on the fact that until 2000, the diamond industry was a monopoly. A monopoly, as defined by our book, has one firm, a unique product, and the entry into the market is blocked. The owner of the diamond industry, Cecil Rhodes, created this by buying all the available diamond mines. He started in 1870’s by buying the mines found in South Africa. As time went on,

First the workers in the diamond trade have horrible working conditions like little pay and no protection from weak or unstable mines. Rebellious military groups have forced people to work and have also murdered, tortured, and done various other crimes to the workers (pg 6-8 Forman). They also have to live with little pay, leaving them with little

Are You Wearing Death? A Research Proposal for the Abolishment of the Blood Diamond Trade

For centuries the diamond has fascinated man for its alluring sparkle and physical hardness. Formed about three billion years ago, the diamond may very well be the oldest and most precious item any person can own. The internationally accepted notion that this commodity is one of the most treasurable commodity of them all has led to the public being prepared to pay the prices that are set by a group of companies in an agreement known as a cartel. This essay will evaluate the diamond market on a microeconomic level and discuss how the diamond cartel came about, what has allowed it to operate for decades, as well as how it determines the price of diamonds. In addition, this essay will, by aid of diagrams

For more than a century the diamond industry has flourished beyond expectations. The diamond has grown from a small yet rare gem stone to that of a rather large and powerful symbol of wealth. The industry has been controlled by one major corporation, De Beers. De beers along with the cartel it set up has built an industry that will last forever. (Spar, 2006) This paper will analyse the diamond industry, paying specific attention to the cartel, how it operates; the future of the system and examine what the price of diamonds would be without a cartel system and a brief history on the diamond industry. Furthermore, it shall comment on the statement that the “The Diamond Price is Too High” and analyse why

DeBeers developed a unique strategy that created a monopoly in the market. They cornered the market on diamonds and controlled the supply so that the value sustained increases year after year after year, and the company was flush with cash. This artificial price fixing led to a situation whereas they could potentially flood the market and create havoc on the economy. The company used several methods to exercise this control over the market: First, it convinced independent producers to join its single channel monopoly, then it flooded the market with diamonds similar to those of producers who refused to join the cartel, and last, it purchased and stockpiled diamonds produced by other manufacturers in order to control prices through supply. (Campbell R. McConnell, Stanley L. Brue, 2005) The DeBeers’ system for distributing stones would not be accepted in any other market. DeBeers had set up a “single source channel,” funneling all diamonds to a clearing house in London, where it brought all its stones for grading and sorting, adding stones it purchased from other mines, as well. They then controlled which stones were released for sale, which controlled the prices. According to the words

Diamonds have been identified as being precious but expensive gems for many decades. Diamonds were extremely rare, only found in India and Brazil until the late nineteenth century (Vogelsang, 2005: 5). After the discovery of diamonds in South Africa, the diamond industry began to flourish. Diamonds then became very abundant and cheap to produce. In order for the value of diamonds to remain as high as they were during the phase in which they were still rare, a diamond cartel was introduced. A cartel is defined as a group of firms that gets together to make output and price decisions (Cartel Theory of Oligopoly, n.d.). Hence, the diamond cartel aimed to maintain high prices to maximise the profits of the suppliers by restricting the supply.

rough diamonds produced. The industry is controlled as a monopoly by the De Beers diamond company which operates from South Africa and London. The wholesale trade and cutting of diamonds is limited to only

Firstly, from a political point of view, the diamond industry has several points that can be judged to be slightly controversial, such as the fact that mining diamonds in West Africa or Angola were used to finance the ongoing civil wars and conflicts that occurred in the late 20th century, thus being called “blood diamonds”. This was problematic for the companies operating in these countries as they were accused of selling these diamonds to the rebels who were fighting legitimate governments. Furthermore, due to the United States antitrust laws on cartelization, De Beers faced many accusations on issues such as collusion and price fixing, and was banned since 1948 from operating on US soil. This is problematic as the USA is the planet’s predominant market for diamonds, accounting for 45% of the world’s diamond jewelry sales, and therefore has to find loopholes in the legislation to be able to profit from the USA’s market. De Beers therefore leads its main selling operations called “sights” in Botswana, which will be discussed later.

As part of the company’s operating philosophy, the people of De Beers are committed to living up to diamonds by making a lasting contribution to the communities in which they live and work. In the countries in which they have mining operations, this means carrying out profitable business, while at the same time helping governments achieve their aspirations of turning natural resources into shared national wealth.

Diamonds are the most expensive and beautiful jewels in the world. Throughout the mankind’s history these desirable, exceptional, and alluring gemstones have been attracting much attention. Uncut stones decorated the armor of knights and faceted ones embellished the crowns of royal persons. The owners of diamonds were adored and envied as crystals were sparkling on noble ladies and fascinated all the people around them. Nowadays, diamonds are viewed not only as symbols of love and betrothal, but also as profitable object of investment. The first such gemstones were found in ancient times in India. However, people do not know the exact date of their discovery. At the beginning of the Renaissance period diamonds appeared in Europe with great fame (Epstein, 1982). For many centuries people had believed that they had some anagogical power like bringing success to their owners, protecting them from diseases and wounds, and giving courage and bravery during the battle. In European countries symbolic interpretation of diamonds was very broad and included steadiness, courage,

In terms of mining diamonds on small scale, they are generally unregulated activity and often has no laws since they the work is done independently and privately rather than through a formal company. Many of these miners do not have a license nor have access to global markets thus limiting their bargaining power and having limited to no leverage thus forcing them to sell the diamonds to middle men which are way below market prices. (Brilliant Earth, 2016)

The governments in the diamond industry have a lot of control what the companies can do. When mining diamonds many of land and resources are used. Governments have to take the interest of their people and also take into account what impact the diamond industry has on the local environment. In the country of Angola diamond mining has had a huge impact. Brilliantearth.com states “irresponsible diamond mining has caused soil erosion, led to deforestation, and forced local populations to relocate” (Brilliant Earth, n.d.). Governments also have to regulate labor laws for their country. In some countries diamonds are mined by small children in unsafe conditions. These responsibilities fall under the local government to protect the land from these mining companies. Local governments can write laws and regulations require diamond mining companies to take extra precautions in order to operate. This could require the diamond company to decide is it worth it to follow these regulations or find a cheaper place to mind