In 1981, the DeBeers Diamond cartel member country Zaire broke free of the cartel's marketing arrangement, the Central Selling Organization, and began to market some of its country's industrial diamonds (called boart) outside the DeBeers cartel. Even though DeBeers was generally pursuing a practice of stockpiling diamonds to prop up world diamond prices, the cartel flooded the market with industrial diamonds, significantly lowering their price to levels at-or even below-marginal cost. Within 2 years, Zaire returned to the DeBeers marketing cartel and sold all the country's diamond production through the cartel. DeBeers' actions between 1981 and 1983 represent ________.

Question

Quizplus · Accepted Answer

DeBeers' actions represent a grim strategy, which involves temporarily lowering prices to punish a competitor (Zaire) for breaking away from the cartel, thereby forcing them back into the cartel.

In 1981, the DeBeers Diamond Cartel Member Country Zaire Broke