IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v73y2006i1p173-189.html

A Cartel's Response to Cheating: An Empirical Investigation of the De Beers Diamond Empire

Author

Listed:
  • Donna J. Bergenstock
  • Mary E. Deily
  • Larry W. Taylor

Abstract

De Beers is one of the longest lived international cartels in history. But have recent events threatened the diamond pricing structure so carefully developed over the past 100 years? In this paper, we use time series econometric techniques to evaluate the cartel's response to Russian cheating in the 1990s, We find that, despite massive Russian leaks, the cartel held to its long‐term supply management policy of using its inventory to control the flow of rough diamonds into downstream markets. Although the cartel was able to survive the cheating, it remains unclear whether De Beers will continue to rely on its traditional strategy.

Suggested Citation

  • Donna J. Bergenstock & Mary E. Deily & Larry W. Taylor, 2006. "A Cartel's Response to Cheating: An Empirical Investigation of the De Beers Diamond Empire," Southern Economic Journal, John Wiley & Sons, vol. 73(1), pages 173-189, July.
    • Handle: RePEc:wly:soecon:v:73:y:2006:i:1:p:173-189
    DOI: 10.1002/j.2325-8012.2006.tb00764.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/j.2325-8012.2006.tb00764.x
    Download Restriction: no
    File URL: https://libkey.io/10.1002/j.2325-8012.2006.tb00764.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kenney, Roy W & Klein, Benjamin, 1983. "The Economics of Block Booking," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 497-540, October.
    2. David Genesove & Wallace P. Mullin, 2001. "Rules, Communication, and Collusion: Narrative Evidence from the Sugar Institute Case," American Economic Review, American Economic Association, vol. 91(3), pages 379-398, June.
    3. Francis X. Diebold, 2004. "The Nobel Memorial Prize for Robert F. Engle," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 165-185, June.
    4. Granger, C. W. J., 1981. "Some properties of time series data and their use in econometric model specification," Journal of Econometrics, Elsevier, vol. 16(1), pages 121-130, May.
    5. Robert Engle & Clive Granger, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    6. repec:bla:jindec:v:45:y:1997:i:2:p:117-37 is not listed on IDEAS
    7. Bergenstock, Donna J. & Maskulka, James M., 2001. "The de beers story: are diamonds forever?," Business Horizons, Elsevier, vol. 44(3), pages 37-44.
    8. Margaret C. Levenstein, 1997. "Price Wars and the Stability of Collusion: A Study of the Pre‐World War I Bromine Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 45(2), pages 117-137, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:lic:licosd:43022 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mohamed, Hazik & Masih, Mansur, 2017. "Stock market comovement among the ASEAN-5 : a causality analysis," MPRA Paper 98781, University Library of Munich, Germany.
    2. Erie Febrian & Aldrin Herwany, 2009. "Volatility Forecasting Models and Market Co-Integration: A Study on South-East Asian Markets," Working Papers in Economics and Development Studies (WoPEDS) 200911, Department of Economics, Padjadjaran University, revised Sep 2009.
    3. Carmen van der Merwe & Martin de Wit, 2021. "An In-Depth Investigation into the Relationship Between Municipal Solid Waste Generation and Economic Growth in the City of Cape Town," Working Papers 07/2021, Stellenbosch University, Department of Economics, revised 2021.
    4. Haldrup, Niels & Nielsen, Morten Orregaard, 2006. "A regime switching long memory model for electricity prices," Journal of Econometrics, Elsevier, vol. 135(1-2), pages 349-376.
    5. Fredj Jawadi & Catherine Bruneau & Nadia Sghaier, 2009. "Nonlinear Cointegration Relationships Between Non‐Life Insurance Premiums and Financial Markets," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(3), pages 753-783, September.
    6. Dookie, Michele & Lugay, Beverly & Sergeant, Kelvin A., 2011. "Consumer confidence and economic growth: case studies of Jamaica and Trinidad and Tobago," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 4086, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Chakraborty, Chandana & Nunnenkamp, Peter, 2006. "Economic reforms, foreign direct investment and its economic effects in India," Kiel Working Papers 1272, Kiel Institute for the World Economy (IfW Kiel).
    8. Asraul Hoque, 1995. "Co-integrating relationship between terms of trade and current account deficit: the Australian evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 2(4), pages 130-133.
    9. David F. Hendry & Grayham E. Mizon, 2016. "Improving the teaching of econometrics," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1170096-117, December.
    10. Khosrow Doroodian & Chulho Jung & Roy Boyd, 1999. "Testing the law of one price under the fixed and flexible exchange rate systems," Applied Economics Letters, Taylor & Francis Journals, vol. 6(9), pages 613-616.
    11. Assogba, Noel Perceval & Zhang, Daowei, 2022. "The conservation reserve program and timber prices in the southern United States," Forest Policy and Economics, Elsevier, vol. 140(C).
    12. Yanhua Chen & Rosario N Mantegna & Athanasios A Pantelous & Konstantin M Zuev, 2018. "A dynamic analysis of S&P 500, FTSE 100 and EURO STOXX 50 indices under different exchange rates," PLOS ONE, Public Library of Science, vol. 13(3), pages 1-40, March.
    13. Kühl, Michael, 2007. "Cointegration in the foreign exchange market and market efficiency since the introduction of the Euro: Evidence based on bivariate cointegration analyses," University of Göttingen Working Papers in Economics 68, University of Goettingen, Department of Economics.
    14. Marc Audi & Amjad Ali, 2023. "Public Policy and Economic Misery Nexus: A Comparative Analysis of Developed and Developing World," International Journal of Economics and Financial Issues, Econjournals, vol. 13(3), pages 56-73, May.
    15. Hasan Gungor & Angela Uzoamaka Simon, 2017. "Energy Consumption, Finance and Growth: The Role of Urbanization and Industrialization in South Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 7(3), pages 268-276.
    16. Zaman, Khalid & Khan, Muhammad Mushtaq & Ahmad, Mehboob & Rustam, Rabiah, 2012. "The relationship between agricultural technology and energy demand in Pakistan," Energy Policy, Elsevier, vol. 44(C), pages 268-279.
    17. Muñoz, M. Pilar & Dickey, David A., 2009. "Are electricity prices affected by the US dollar to Euro exchange rate? The Spanish case," Energy Economics, Elsevier, vol. 31(6), pages 857-866, November.
    18. Cristian Barra & Giovanna Bimonte & Pietro Spennati, 2015. "Did fiscal institutions affect Wagner's law in Italy during 1951-2009 period? An empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 47(59), pages 6409-6424, December.
    19. Møller, Niels Framroze, 2008. "Bridging Economic Theory Models and the Cointegrated Vector Autoregressive Model," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 2, pages 1-29.
    20. Zhang, Rongmao & Chan, Ngai Hang, 2018. "Portmanteau-type tests for unit-root and cointegration," Journal of Econometrics, Elsevier, vol. 207(2), pages 307-324.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:73:y:2006:i:1:p:173-189. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.