Why was a product well suited to monopolization

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In 1866, a child walking along the Orange River in South Africa picked up an odd-looking pebble that turned out to be a 21-carat diamond. That discovery on a farm owned by Johannes De Beers sparked the largest diamond mine in history. When the Great Depression caused a slump in diamond prices, De Beers Consolidated Mines undertook successful efforts to control the world supply of uncut diamonds and to increase consumer demand for cut diamonds. The company was able to increase consumer demand through a carefully tailored marketing program. De Beers spends about $200 million a year trying to convince people that diamonds are scarce, valuable, and perfect reflections of love. De Beers' slogan, "A diamond is forever," sends several messages, including (1) a diamond lasts forever, and so should love; (2) diamonds should remain in the family and not be sold; and (3) diamonds retain their value.

Why was this product well suited to monopolization? How could De Beers use its monopoly position to increase demand? How did it maximize its profits? Were there substitues or complements that were impacted by De Beers action?

Reference no: EM13184257

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