There is no doubt that the price of diamonds is high, but the question is whether it is too high. The diamond industry is controlled by DeBeers, a well-known international cartel. A cartel forms when companies agree to act together for anti-competitive purposes instead of competing against each other. Cartel members make more profit than they would if they competed fairly in setting prices. This means that goods and services become more expensive. (Commerce Commission New Zealand, 2014) Diamond prices were initially very high due to immense scarcity - the only two diamond producing countries were India and Brazil (Tobias Kretschmer edited by Professor Luis Cabral, 1998 ). However; When diamonds were first discovered in South Africa in 1867, the supply increased rapidly, although the notion of precious and rare diamonds still remains today. (Tobias Kretschmer edited by Professor Luis Cabral, 1998)Cecil Rhodes first leased pumps to mines in South Africa, but soon realized that the discovery of diamonds would cause prices to fall. Rhodes founded DeBeers in 1870 and soon had enough mining claims to create a diamond management company, named DeBeers Mining Company. (Tobias Kretschmer supervised by Professor Luis Cabral, 1998) At the same time, he takes control of distribution channels through the "Diamond Syndicate", an alliance of merchants who respect Rhodes' conditions, recognizing that they also aim for prices high and a notion of scarcity. (Tobias Kretschmer, edited by Professor Luis Cabral, 1998) Rhodes was able to create the diamond cartel because he was the sole owner of the mines. He restricted supply, to maintain the idea of ​​scarcity that had made diamonds so p...... middle of paper ... this way due to previous publicity and belief in scarcity. Without this long-held idea that value far exceeds monetary value, diamonds might not have been used in engagement rings, due to the slogan "Diamonds are forever" and the quote " A precious stone is the ultimate luxury product.” It has no material use. Men and women desire to own diamonds, not for what they can do but for what they desire. » (N Oppenheimer, Unknown) would have little value if they were an ordinary and abundant commodity. It is clear that the price of diamonds is too high. This is solely due to manipulation of production and marketing (Investopedia US, A Division of IAC, 2014). Complete control of production (through DeBeers) and effect on demand (through successful advertising) raised the equilibrium price and forced the price of diamonds to become too high..