People have different ways of valuing a diamond. Some people are interested in sentimental value and others consider the price of diamonds in their evaluation process. So, is it fair to say that the price of diamonds is too high? In this essay I will discuss the validity of this statement with reference to the diamond industry market, the diamond cartel, how the price of diamonds is set and its implications. Before analyzing the topic, I will discuss the history. of the diamond cartel. “A cartel is a group of companies acting together…to limit production, raise prices, and increase economic profits. » (Parkin, 2013, p. 312) The diamond cartel was formed around the time diamonds were discovered in South Africa. Cecil Rhodes had organized mining operations and territorial claims in South Africa and began to form the diamond cartel, mainly controlled by his company, De Beers. (Spar, 2006: 197) The cartel was formed following a supply and demand problem due to the discovery in South Africa. The supply of diamonds has increased, which has had a negative effect on the scarcity of diamonds. Since diamonds have become more readily available, they have lost their value, both sentimental and monetary. Looking at the chart below we can get an idea of ​​what happened to the price and value of diamonds. The increase in the supply of diamonds following the discovery, as shown by the shift to the right in the supply graphs above, resulted in a decline in the price of diamonds, all else equal. Since diamonds have become more readily available, due to falling prices and increasing quantities, they have lost their "association with romance and luxury" (Spar, 2006: 198), resulting in a decrease...... middle of paper ...... for De Beers to have control of the diamond industry, "[they] had to control demand as well as supply." (Epstein, 1982: 1)ReferencesEpstein, EJ (1982) “Have you ever tried to sell a diamond? » Atlantic Monthly, 23 Available at: http://cdn.preterhuman.net/texts/religion.occult.new_age/occult.conspiracy.and.rated/The%20Atlantic%20-%20Have%20You%20Ever%20Tried%20to %20Sell%20a%20Diamond.pdf [Accessed April 9, 2014].Lerner, AP (1934) “The Concept of Monopoly and the Measurement of Monopoly Power” The Review of Economic Studies, 1 (3), p. 157. Available at: http://www.jstor.org.ezproxy.uct.ac.za/stable/pdfplus/2967480.pdf?&acceptTC=true&jpdConfirm=true [Accessed April 7, 2014].Parkin, M. (2013 ) Economy. 5th ed. Cape Town: Pearson Education South Africa. Spar, DL (2006) “The Journal of Economic Perspectives” 20 (3), pp.. 195-208.