The DeBeers Diamond Cartel

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Since the discovery of diamonds, the precious gem has always remained an item of luxury and great beauty and one that requires a great deal of financial sacrifice in order to acquire. Prices of diamonds have remained relatively stable over the last 100 years while prices of other commodities have fluctuated heavily (Hauser, 2002). Diamonds are a relatively rare commodity which gives them a high value and with the help of De Beer’s advertising campaign, spanning the last six decades, that high value appeal has been sustained. However, the high price of diamonds cannot be solely down to its rarity as the discovery of new deposits over the past decades has led to an increase in the number of diamonds available and thus since they aren’t as rare as they once were, the prices should’ve dropped. This essay argues that the price of diamonds is too high due to the fact that although the amount of diamonds available has increased over time, prices have remained relatively stable. The essay will show that there are powerful entities influencing the price of diamonds in such a way that the current and recent prices have been much greater compared to what they were and are meant to be. The essay will achieve its objectives through outlining the role of the diamond cartel in influencing the price of diamonds and it’ll seek to highlight the powerful entities controlling the cartel and explain how the cartel managed to set and maintain high prices. For the past 112 years, De Beers has dominated the diamond industry. Established in April 1880 by Cecil John Rhodes and his partner, Charles Dunell Rudd, De Beers rose to prominence, merging with Barney Barnato’s Kimberley Central Mining company and acquiring more and more mines (Hauser, 2002). The ... ... middle of paper ... ...ine] Available at: http://www.investopedia.com/terms/c/cartel.asp [Accessed 9 April 2014]. Goldschein, E., 2011. Business Insider: The Incredible Story Of How De Beers Created And Lost The Most Powerful Monopoly Ever. [Online] Available at: http://www.businessinsider.com/history-of-de-beers-2011-12?op=1 [Accessed 9 April 2014]. Hauser, E., 2002. "The Diamond Cartel: Monopolizing an Industry.". History Behind the Headlines: The Origins of Conflicts Worldwide. Ed. Sonia G. Benson, Nancy Matuszak, and Meghan Appel O'Meara. Vol. 3. Detroit: Gale, pp. 61-72. Spar, D. L., 2006. Markets: Continuity and Change in the International Diamond Market. The Journal of Economic Perspectives, Vol. 20, No. 3 (Summer, 2006), pp. 195-208. Vogelsang, I., 2005. The International Diamond Cartel. [Online] Available at: http://are.berkeley.edu/~sberto/debers.pdf [Accessed 9 April 2014].
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