Unformatted text preview: ct not all that scarce. Their reputation for
rarity comes in no small part from man, not nature.
Anybody who doubts that the diamond cartel has sustained a remarkable illusion need look no farther than the recent
troubles at the bottom end of the market. Argyle mine, Australia’s diamond producer, used to sell its stones via the CSO .
It digs out more diamonds than anybody else in the world, but the quality of its stones is poor. By value, it turns out just
5% of the world’s total. In July 1996, grumbling that the CSO was not giving it a fair deal, Argyle quit. Since then, and als o
thanks to the continued leakage of low-quality Russian diamonds, the price of low-quality diamonds has done the
unthinkable and collapsed.
ECO 204 Chapter 16: Analysis of Firms with Market Power (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. One Antwerp dealer says that, on the open market, the price of such gemstones has plunged to just over a third of what
they fetched before the Australians pulled out. De Beers argues that thes...
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