Lab-grown diamonds are gaining share, but they might be getting too cheap and large
By Jinjoo Lee of The WSJ. Excerpts:
"After a postpandemic surge in demand in 2021 and 2022, natural-diamond prices are down about 8% compared with the first quarter of 2020, while lab-grown diamond prices are down 75%" [if they are substitutes for each other, then if the price of lab diamonds falls (due to lower costs, see more below), then the demand for natural diamonds will shift to the left, lowering the price)]
"Lab-grown diamond prices are declining because the cost of manufacturing them keeps coming down, but weak demand is largely to blame for declining natural-diamond prices."
"Natural-diamond jewelry sales in the U.S. declined 0.7% through November compared with a year earlier, while lab-grown diamond-jewelry sales rose 12.5%" [supply shifting to the right due to lower costs for labs means a lower price and a higher quantity demanded-also falling sales for naturals means a lower quantity demanded which is also consistent with demand shifting to the left]
"In a 2024 survey of U.S. consumers by the Knot, an online wedding-planning platform, more than half of respondents said their engagement rings featured a lab-grown diamond as a center stone, up from 46% in 2023 and 12% in 2019."
"the costs of manufacturing lab-grown diamonds are coming down faster than the retail price of lab-grown diamond jewelry."
"And barriers to entry for manufacturing lab-grown diamonds are low: The cost of equipment has come down" [no barriers to entry is characteristic of perfect competition-this allows more firms to enter an industry that has become more profitable-this comes up later]
"the retail environment for lab-grown diamonds is becoming more competitive: Even Walmart is selling them."
Related posts:
More engagement rings have lab created diamonds (2023)
Is it okay to propose to your sweetheart with a diamond that was made in some drab office park? (2017)
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