De Beers would determine the price and quantity of diamonds for the year. Therefore each one of its producers would receive a part of the total output to be sold at the predetermined price. When the monopoly was threatened through the discovery of diamonds in other countries, De Beers bought the diamonds increased their inventory and therefore their complete control through funneling all sales through single channel. When rebellions against De Beers occurred, th... ... middle of paper ... ...er’s diamond cartel, the world’s most powerful monopoly, no longer exists, the company itself is still a billion-dollar business. The demand for diamonds is still great and the supply scarce.
34).Through this, a cartel was born and this commenced the world monopoly for the sale of diamonds (Browne, 2012, Pg. 34). Ever since a cartel was put in place the price of diamonds has been too high. This essay is going to discuss why the price of diamonds is too high and will do so by looking at how the cartel sets the price of diamonds and what the price of diamonds would be in the absence of a cartel. Rhodes had identified two problems within the diamond trade.
Despite the cultural encouragement, consumers should consider the history and ethical practices of the diamond industry for both merchants and the public before deciding to support the industry. It is important to recognize that as society continues to promote the importance of diamonds, they are promoting an industry founded on unethical and violent beginnings. Historically, diamonds were considered rare; before the 1800s, Brazil and India were the main source of these gems (Shenigo). However, after the Eureka Diamond discovery in South Africa, it was soon realized that diamonds were abundantly available (Cleveland 39). Prospectors flocked to the area to stake claims, often forcing out land owners with little to no compensation.
These stages of production are costly and this was the shortfall of many of the diamond mining companies, and thus a merger was formed. The agreement b... ... middle of paper ... ...orms of society that have been set by the successful cartel De Beers and welcomed by the public, a diamond ring is indeed the only acceptable engagement ring – the ultimate symbol of love and romance. References: Fog, B. 1956. How are Cartel Prices Determined?
The De Beers Diamond Company is well known, internationally based diamond trading and mining company. It has guarded the diamond flow in to the United States market for past several decades. Conceivably, a more suitable title for De Beers would be cartel as it started as groups of producers whose objective was to control supply of diamonds, fix prices and limit competition, and the groups actually did what it is decided at the very beginning. The name “De Beers” originated with two Afrikaner farmers Johannes Nicholas de Beers and Diederik Arnoldus De Beers. These two brothers found diamonds on their farm and it was hard for them to protect these diamonds from the invasion of mad diamond seekers.
The global perception of the diamond has a fascinating duality about it. Commercially, especially in the United States, diamonds are equated with love and life-long commitment. However, with the recent news of the blood diamonds and issues that have risen out of the illegal trade of the precious gems, diamonds are also being blamed for the finance of deadly conflicts. Because of this, diamonds provide an interesting vehicle through which to trace global events of the twentieth century. When did diamonds become valuable and how did they maintain this status for so long?
“The price of diamonds is too high” The international diamond cartel and more prominently De Beers, has used its dominant power and manipulation to create an illusion that has existed in the diamond market since the company was established in the 1880’s. The illusion of diamonds being rare and scarce led consumers to believe that their value would last forever and eliminated the option of resale in their eyes. This illusion is also what caused consumers to accept the prices of diamonds, a price that is inevitably too high. The modern diamond industry was launched in 1867 by the accidental discovery of diamonds in South Africa. This was an industry that would soon be taken over by an Englishman, Cecil Rhodes, who arrived in Kimberly Mine in 1874.
Diamonds have been a symbol of love and commitment for centuries, as well as a symbol for power and wealth. They were thought to be tears of the gods by the Greeks and splinters of stars by the Romans (“History Of Diamonds”). Their rarity, strength, and unparallel beauty have resulted in a high price of up to $28,400 per carat for a high quality cut diamond (“Diamond Price per Carat”). However, though most don’t know it, the pure perfect diamonds being sold in stores are part of a very bloody process. Of 246 diamond retailers in the U.S., only 27% were able to assure they had a policy on conflict diamonds (“Conflict Diamond Statistics”).
“THE PRICE OF DIAMONDS IS TOO HIGH” 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.
Introduction This essay supports the statement “The price of diamonds is too high”. Diamonds have always been presumed to be rare. They have been present in history as a symbol of wealth and luxury as they were so difficult to find. Nowadays diamonds are mined and are found all over the world but they are sold through a cartel. (Epstein 1982) A cartel limits the supply of a product in order to keep prices high and to limit competition.