ajaz_eco_204_2012_2013_chapter_16_Market_Power

It mines half the worlds diamonds itself in south

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Unformatted text preview: erican advertising men and still used today, sells two dreams in one: that diamo nds bring eternal love and romance, and that diamonds never lose their value. Like magic, the dream has come true. Unlike such other precious commodities as gold, whose price has yo-yoed over the years, the average price of diamonds has maintained a relentless upward creep. Between 1986 and 1996, average prices of diamonds grew by 50%. Again like magic, this took place despite the fact that over the same period more and more diamonds flowed onto the market. How? The answer lies in the little brown boxes handed out in Charterhouse Street. Through such allocations, De Beers controls the supply of about three-quarters of the world’s rough (uncut) diamonds via its marketing arm, the Central Selling Organisation (CSO ). It mines half the world’s diamonds itself , in South Africa, Namibia and Botswana. The rest it sucks into its system through contracts made with other diamond producers, and by dispatching its buyers, whose clippe...
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