De Beers was more efficient under a monopoly.
A lot of factors are responsible for the given argument :
- They owned majority of the diamond mines and had agreements
with numerious supplying companies, making them the largest in the
business. Hence, price could be easily manipulated in their
favor.
- They benefited from the economies of scale as they have
dominated the world market and expanded its size of production, the
cost of production decreased and profits maximized.
- It had greater advantage in product specialization as it could
better target the potential customers.
- No spillover of knowledge since they were the sole producers,
hence,new ideas benefited only them.