How did De Beers' distribution changes in the 2000s affect market competition and price transparency?

• A. Left distribution unchanged but increased marketing.
• B. Moved from opaque, tightly controlled production to more open distribution, enabling competition and price discovery.
• C. Stopped selling rough diamonds altogether.
• D. Brought stricter controls and reduced price transparency.

Answer: (B)

Opening up distribution exposes more buyers to rough diamond supply and creates market pricing signals. When De Beers moved away from a tightly controlled, opaque system toward broader, multi-channel distribution in the 2000s, more participants—manufacturers, traders, and retailers—could access rough diamonds and observe price movements. That democratization of supply meant prices no longer stayed hidden behind a single set of allocations; instead, they reflected real-time demand and competition across the market. As price signals became clearer and more widely available, firms could bid, negotiate, and compete more effectively, leading to stronger competition and better price discovery.

The alternative that distribution stayed the same doesn’t fit the shift toward openness, and the idea that De Beers stopped selling rough diamonds or imposed tighter controls with less price transparency contradicts the liberalizing trend that characterized the period.