Professor Mark J. Perry's Blog for Economics and Finance
1. The Incredible Story Of De Beers Diamonds: How It Created And Lost The World's Most Powerful and Longest-Lasting Monopoly in History
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
3 Comments:
i found this quote from the diamonds article to be really funny:
"But the diamond rush that began in South Africa in the second half of the 19th century flooded the market with diamonds, which, as any good businessman knows, kills demand."
um, no. it drops price, which dramatically increases demand. this seems like a pretty glaring error to make it through editing and a sad statement about the economic literacy of journalists.
I agree with Morgan, but with this caveat: You can't sell cheap perfume.
It may have been that if diamonds became cheap, then became commonplace, and thus lost their allure, and then were a passing fad for a while. You couldn't give them away.
So Morgan could be wrong, as he lacks the ability to see nuances in which reality trumps theory.
For myself, I never understood the allure of diamonds, or any baubles, including gold. The allure of such gimcrackery shows the malleable nature of consumer demand.
Remember what my grandfather said, "All gold is fool's gold."
Wise words indeed.
bunny-
they never got so cheap as to lose allure.
instead, they became a common engagement gift as opposed to one for robber barons only.
to speak of nuance trumping theory while completely ignoring the facts seems like a pretty specious argument. it seems like you are the one unable to see the reality.
sure, there is reverse price discrimination in some segments, but your perfume example is also wrong.
cheap perfume by far outsells chanel number 5.
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