People have different ways of evaluating a diamond. Some people look at sentimental value, while others consider the price of diamonds in their appraisal 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, the way in which 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 businesses that act together… to limit production, raise prices and increase economic profit.” (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 land claims in South Africa and had begun to form the diamond cartel controlled primarily by his company, De Beers. (Spar, 2006:197) The cartel was formed following a supply-demand problem due to the discovery in South Africa. The supply of diamonds had increased and this had a negative effect on the scarcity of diamonds. As diamonds have become more readily available, diamonds have lost their value, be it sentimental or monetary. By looking at the graph below we can get an idea of ​​what has happened to the price and value of diamonds. The increase in the supply of diamonds as a result of the discovery, as seen in the rightward shift of the supply graphs above, has resulted in a decrease in the price of diamonds, other things being equal. As diamonds had become more readily available, as a result of lower prices and larger quantities, they had lost their “association with romance and luxury” (Spar, 2006:198), resulting in… half of the paper ... for De Beers to have control of the diamond industry, they "[had] to control demand as well as supply." (Epstein, 1982:1) References Epstein, E.J. (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.parent/The%20Atlantic%20-%20Have%20You%20Ever%20Tried% 20to% 20Sell%20a%20Diamond.pdf [Accessed: 2014, April 9].Lerner, A.P. (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: 2014, April 7]. 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.