Debeers

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DE BEERS| OPEC|
| Even before the Organization of Petroleum Exporting Countries in the last decade forced a 15-fold increase in the price of oil, suppliers of tin, nickel, coffee, cocoa and natural rubber were flexing market muscle, trying to control prices.| | Encouragement came from the United Nations Conference on Trade and Development, a body chiefly representing poor countries, which are the source of most commodities. The conference's leaders saw higher prices as a way to improve the incomes of third world countries and to achieve what they said was the urgent need for global redistribution of wealth| | Efforts to fix prices for many other commodities - potash, lead, zinc, copper, nickel, sugar, cotton, timber, jute - have also failed. The principle reason for such failures is the adequacy of supplies and availability of substitutes.| | Over the shorter periods cartels in some products can work, and even have done so spectacularly. But over the long term they fail.''The one big exception is the successful de Beers diamond cartel, which has operated through this century as the single major buyer of most of the world's diamonds. De Beers, based in South Africa, seems to have worked relatively smoothly over the years. Even the Soviet Union, the second largest diamond exporter in the world after South Africa, is apparently pleased.De Beers, which buys diamonds from mines in South Africa, Namibia and most other regions of the world, is technically a monopsonist, or the single buyer for a commodity. Then it turns around with almost absolute market control to become the single principal source of supply.| | As new mines come on, de Beers manages to find them sufficient market share so that they elect to continue selling their production to de Beers and accepting the de Beers production control system rather than go it alone.''For successful price intervention, obviously, the fewer the producers of a commodity the better.| | |

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