De Diamond Case Study

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ANALYSIS OF A MONOPOLY: THE DEBEERS DIAMOND COMPANY ECONOMICS PROJECT SUBMITTED BY ANKITA GAUR (2013-10 NALSAR UNIVERSITY OF LAW TABLE OF CONTENTS Contents Introduction 3 History and Monopoly Formation of DeBeers 4 Market Practices Of DeBeers And Its Evolution 7 The Fall Of DeBeers And The Current Scenario 10 Conclusion 13 Bibliography 14 INTRODUCTION “A gemstone is the ultimate luxury product. It has no material use. Men and women desire to have diamonds not for what they [diamonds] can do but for what they desire. ” - Nicky Oppenheimer This quote by the Chairman of the DeBeers group shows exactly how the world treats these colourless minerals, which are nothing more than pure compressed carbon. Diamonds in the world are neither scarce,…show more content…
A London-based group, known as the Central Selling Organization (CSO) was created for the purpose of acting as the chief intermediary between the stones mined in any given year and the consumers who would eventually purchase or polish or wear them which practically meant a system that brought diamonds from the dirt directly to the hands of brides-to-be. An elite group of dealers, called “sightholders”, was handpicked by DeBeers. This group was to meet at the CSO ten times every year, where each would be presented with an individual parcel of stones, chosen by the CSO. This parcel of diamonds reflected both what the sightholder was hopeful of selling in the ensuing weeks and what DeBeers sought to place into the market. This parcel was to be either accepted by them in its entirety or not at all, so that De Beers could establish the precise size and quality of diamonds available each year and also their price. Moreover, the sightholders were encouraged not to procure diamonds from any source other than the CSO, nor even to repurchase a “used” or second-hand

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