The De Beers model changed at the turn of the 21st century, when diamond producers from Russia, Canada, and Australia started to distribute diamonds outside of the De Beers channel. De Beers also purchased and stockpiled diamonds produced by other manufacturers in order to control prices through supply.
In instances when producers refused to join, De Beers flooded the market with diamonds similar to the ones they were producing. It convinced independent producers to join its single channel monopoly. De Beers had a monopoly over the production of diamonds for most of the 20th century, and it used its dominant position to manipulate the international diamond market. De Beers Consolidated Mines were founded in 1888 in South Africa as an amalgamation of a number of individual diamond mining operations. This is a classic outcome of imperfectly competitive markets.Ī classic example of a monopoly based on resource control is De Beers. In other words, resource control allows the controller to charge economic rent. Single ownership over a resource gives the owner of the resource the power to raise the market price of a good over marginal cost without losing customers to competitors.
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