The price of diamonds is too highFor centuries, the diamond has fascinated man for its alluring brilliance and physical hardness. Formed approximately three billion years ago, the diamond may very well be the oldest and most valuable item a person can own. The internationally accepted idea that this product is one of the most valuable commodities of all has led to the public's willingness to pay prices set by a group of companies under an agreement known as cartel. This essay will evaluate the diamond market at the microeconomic level and explain how the diamond cartel came to be, what allowed it to operate for decades, and how it determines the price of diamonds. Additionally, this essay will assess, using charts and graphs, what the price of diamonds would be in the absence of cartels and demonstrate why the price of diamonds is not too high. Until the 19th century, diamonds were considered to be one of the most precious possessions that could be found, which is why they were reserved only for those who were heads of royal families. However, everything changed when English-born businessman Cecil John Rhodes purchased diamond fields in South Africa as well as diamond rights and established the company "De Beers", named after two brothers who had discovered diamond deposits on their land. , which allowed the general public to own a piece of this precious stone – at a premium price. The rough diamond that lies beneath the surface must undergo several stages of production before being transformed into a diamond used in jewelry. These production steps are expensive and this is what many diamond mining companies lacked, and thus a merger was achieved. The agreement born...... middle of paper ......corporate forms that were established by the successful De Beers cartel and praised by the public, a diamond ring is indeed the only ring acceptable engagement date - the ultimate symbol of love and romance.References: Fog, B. 1956. How are cartel prices determined? The Journal of Industrial Economics. 5(1): 16-23 Goldschein, E. 2011. The incredible story of how De Beers created and lost the most powerful monopoly of all time. Available: http://www.businessinsider.com/history-of-de-beers-2011-12?op=1Kochevrin, IB 1979. Cartel prices. The Great Soviet Encyclopedia. The Gale Group Levenstein, MC and Suslow VY, 2006. Journal of Economic Literature. 44: 43-95Spar, DL 2006. Markets: continuity and change in the international diamond market. The Journal of Economic Outlook. 20(3): 195-208Vogelsang, I., 2005. The international diamond cartel. PEE. 142:1-9