POLA02H3 Lecture Notes - Lecture 12: Mpla, Blood Diamond, Cecil Rhodes
22 Sep 2015
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Document Summary
Class 7: are diamonds forever making a problem: diamonds- looking for 4 c"s, clarity, colour, cut, and carat, two types of diamonds- rough diamonds found in kimberlitic pipes near volcanoes, or alluvial- easy to find, on river beds- Pola02 final exam notes result of erosion: concepts that can be applied to diamond trade- capital & risk- diamond mining and trade. African miners (cecil rhodes, de beers) could not trust the people to abide by the price level, so they bough all of the diamond supply. Principal- agent problem- can you trust the salesperson, supplier, shipper etc. Exit- workers from one area can just leave due to unjust treatment. High transaction costs- the kimberlite process is extremely pricey: cooperation challenges- potential for fraud is very high! One can easy look into their own self interest because it is highly profitable. High level of experience is needed at different places along the chain.
