Diamonds Pricing and Ethical Issues Surrounding Diamonds

Research Paper (undergraduate) from the year 2018 in the subject Business economics - Economic and Social History, grade: 1, , language: English, abstract: Diamonds are believed to be among the most precious commodities for trade. In the past three centuries, diamond has been considered to be one of the rarest mineral elements in the earth’s crust. However, the immense demand for diamond by the global population appears to be the most probable reason as to why diamonds have always been considered as a scarce trade commodity. Interestingly, geological findings indicate that diamonds top the list of the most abundant gem-quality colored stones. It is argued that diamond pricing is the most outstanding feature which creates unusual demand; thus, making diamonds rare. The second reason why diamonds have been considered to be scarce is the nature of the market structure. Over the years, diamond market has been characterized with an unprecedented monopoly in which a single player existed in the market. As a result, diamond pricing and its supply experienced unique market trends, and this is the principal reason as to why diamond supply chain has been manipulated to create market demand against business ethics. The De Beers Company has been exercising monopoly since its establishment in 1880s when Cecil Rhodes started diamond trading. Despite the legal barriers including the U.S anti-trust laws, this company has always exercised monopoly in diamond trading. However, monopoly in the diamond market seems to end soon because its supply will increase significantly after Russia joins the market. Recently, a huge diamond field was discovered in Siberia which can supply the world market with trillion of carats in the next thirty centuries. As a result, the structure of the diamond market is believed to change drastically in the future. Therefore, this research paper will provide an overview of diamond trading, especially with regard to the principal elements of diamond pricing.