Homework 2
Economics 118
Industrial Organization

Due Feb. 28, 2005

Answer the following questions from the book:

8.1, 8.4, 8.5, 8.6, 8.9

In addition, answer the following:

a. Summarize briefly the structure of the diamond industry. What is unique about diamonds and how is it possible for this market to be a cartel?

b. What are the basic tenets of US anti-trust law which are relevant to the de Beers case?

c. How do you think the authors portray de Beers and the US government in this case study?