The Price of Diamonds Is too High in the Modern Market

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Society as a whole has become more and more dependent on diamonds as the years go by. From finding this rare gem in the depths of the earths’ crust, to it now being used as a certain love gesture. The rarity of this beautiful gem has changed, however has the price of diamonds changed accordingly with its value (placed upon by society). This essay will effectively argue that the price of diamonds is too high in the market in the present day as a result of various economic factors. The essay will give information on diamond cartels and how these cartels had been influencing the price of the diamonds. Furthermore, the essay will give rise to the economic theories that affect these prices and how the price is controlled in the market.

Investopedia refers to a cartel as an organization that is created from a formal agreement between a group of competing producers to regulate supply in order to effectively manipulate the prices of the good or service, in this case diamonds. These collection of businesses/countries act together as a single producer to influence prices of the goods/services by controlling production. However, a cartel has less influence on the market than a monopoly (Investopedia, 2009).

Initially diamond trading occurred only between two countries, Brazil and India. Diamonds were scarce until the mid-19th century when diamonds were discovered in South Africa, and so began the diamond rush of modern times (Goldschein, 2011). Harry Oppenheimer took over the DeBeers mining company and has turned it into an international conglomerate. Each year, the DeBeers determine the total of diamonds it plans to sell and each producer is guaranteed a fixed percentage of total output by them. The diamonds are bought and marketed thro...

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