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Free Content Markets: Continuity and Change in the International Diamond Market

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Abstract:

The international diamond cartel, which presides over the production side of the industry, may be the most successful and longest-lasting cartel in the world. The dominant company in the industry, DeBeers, has been around since 1880 and has been controlled by a single South African family, the Oppenheimers, since 1925. Eight countries produce the bulk of the world's gem diamonds, and most of the producing entities within these countries conform to a set of rules. This conformity is the product of over a century of careful planning and negotiation, in which DeBeers has undertaken largely successful efforts to control the diamond trade and maximize its long-term prospects. The past decade has seen the end of apartheid in South Africa, the fall of communism in Russia, the opening of major mines in Canada, and the emergence of a worldwide movement against so-called "blood" or "conflict" diamonds. While, these developments have pummeled the diamond industry and forced its central players—most notably DeBeers—to change the nature of their trade, these changes have not affected the core dynamic of the global diamond market. It remains an industry dominated by a single firm and an industry in which, perhaps uniquely, all of the major players understand the extent to which their long-term livelihood depends on the fate and actions of the others.

Document Type: Regular Paper

DOI: https://doi.org/10.1257/089533006780387553

Publication date: 2006-06-01

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  • The Journal of Economic Perspectives (JEP) attempts to fill a gap between the general interest press and most other academic economics journals. The journal aims to publish articles that will serve several goals: to synthesize and integrate lessons learned from active lines of economic research; to provide economic analysis of public policy issues; to encourage cross-fertilization of ideas among the fields of thinking; to offer readers an accessible source for state-of-the-art economic thinking; to suggest directions for future research; to provide insights and readings for classroom use; and to address issues relating to the economics profession.
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