Overhead on NPR's Marketplace:
by Jon Shea
5 April 2006
“De Beers gets most of it’s profits not from digging diamonds out of the ground, but from cutting, polishing, and marketing them.”
Actually, De Beers gets most of it’s profits from controlling a cartel that artificially limits supply to drive up prices and collect monopoly rent. That’s why they’re the second most evil corporation in the world.
Good try, though, with the cutting and polishing idea.
Apr 5, 06:44 PM
“That’s why they’re the second most evil corporation in the world.”
Ok, I’ll bite. What’s #1? Wal-Mart?
:ducks:
Apr 5, 06:55 PM
It’s OPEC. My use of the word “corporation” is confusing, though. I’ll try to think of a revision.
Apr 5, 07:08 PM
I’ll admit I’m not very familiar with the economics of OPEC. Are they artificially depressing oil prices, or raising them? Or is it debatable?
Apr 6, 08:48 AM
Joran: OPEC raises oil prices, DeBeers raises diamond prices.
I’m not as offended by NPRs claim as Jon is.
True, DeBeers is collecting monopoly rents (receiving high prices) on something they do. In this case, cutting, polishing and marketing diamonds.
Jon’s right, this is only lucrative because they’ve monopolized the market which allows them to have very high prices. But it seems fair to say that they’re making money on the diamonds.
Jon: would you object to someone claiming that OPEC makes profits by drilling and selling oil?
That sounds like a reasonable claim to me, even if it doesn’t specify why it’s profitable.
Apr 6, 10:47 PM
I would object strongly to the claim that OPEC makes profits by drilling and selling oil. They make money by fixing prices, the oil is incidental.
May 27, 08:07 AM
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