Essay On Diamond Cartel

761 Words4 Pages
Should diamonds be seen as such highly sought-after, luxury goods, and marketed and sold at such extravagant amounts? While some individuals might be of the impression that diamonds are lavishly priced, because of limited supply, it is of my opinion that a very shrewdly-created cartel disguises the very reason for these “rare” gems seemingly being worth your “pretty penny”.
Based on the integration of a cartel of its type in the diamond market, I see it fit to say that the price of diamonds is set above what is reasonable. This essay will expound the role of the diamond cartel in cinching the high price charged by all those involved in selling diamonds. (Levenstein, Suslow, 2008: Cartel) states that cartels are agreements or associations between or of firms, with the aim of fixing prices and/or limiting output. These can operate in multiple ways, from rigging auctions, to separating their firms far from each other, making it seem as though they are the only supplier of a specific commodity within a certain area and thus limiting supply within their respective area. On average, cartels last just about five years and then end, often as a result of legalities, seeing as cartels are most commonly illegal.
In this case, it is a diamond cartel which has a role to play in the price of diamonds and the following essay is going to use demand and supply curves or diagrams and various other resources to explain how a cartel can affect the price of a good, but specifically a diamond. It will also illustrate how different the market for diamonds would be without the incorporation of a cartel. First and foremost, however, this essay with explain the history of both diamond market and diamond cartel creation from its proverbial “roots” here in...

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... immediately decreasing the price of diamonds. Sometimes, as in the case with Soviet diamond being of the best quality, De Beers couldn’t always have it their own way and had to then negotiate lower selling prices from them to the Soviet buyers in order to restrict the Soviets from flooding the market with their own diamonds.
The demand-side of this cartel was primarily driven by advertising and in 1948, its world-renowned statement of “A diamond in forever” won over consumers like nothing had ever before. This associated an idea of a diamond being an “heirloom”, decreasing the chances of the resale market of diamonds booming. They were seen as “priceless”, similarly to love: something that is just immeasurable. De Beers ingeniously lead consumers towards buying their most fancy and rare cut of diamond to act as the talisman for love for their “female associates”.
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