Monopoly behaviour of the DeBeers Diamond Company

Abstract

Monopoly is the dominating one firm in the market, there is no
competitors or no other substitute firms in the market. Monopoly has an ability to set price
on his own product. Many researches have been analysed the efficiency of monopoly and
its effects to consumer behaviour. The inefficiency of Monopoly is proved by price is
above the marginal cost and it causes the shortage of product in the market. Thus,
monopolist produces and sells the limited quantity of product and it is below the rank the
social efficient level. This research has been conducted on the monopoly behaviour of
DeBeers Diamond Company. In the Introduction section numerous papers on the
efficiency of a monopolistic market have been revived and analysed. In the body part
natural barriers to entry, unfair competition of computer software markets, monopoly
pricing and social cost of diamond market have been discussed, and in final part how
social cost occurs the government intervention to the market have been demonstrated.