Abstract: This paper investigates the relationship between the selling price of diamonds and their weight in carats. For this purpose, we use a unique sample of 112,080 certified diamonds collected from www.info-diamond.com during the first week of July 2011. We find substantial differences in pricing depending on cut shape. The price of diamonds increases markedly with the carat weight, with a price elasticity equal to 1.94. However, estimates from unconditional quantile regressions show that the price-weight elasticity is not constant since it rises along the price distribution of diamonds. Finally, we observe the existence of significant increases in prices for diamonds featured with round weights compared to gems just below these threshold weights. The worldwide market for gemstone diamonds is full of anomalies and peculiarities. Gemstone diamonds are often purchased because they are expensive. After the end of the 19th century the diamond market was controlled by a worldwide monopoly, and later by a cartel which in turn was firmly controlled by the former monopolist - De Beers. The existence of a monopolistic supply is a necessary condition to prevent the diamond market from breaking down. Using a simple microeconomic model the paper investigates how the monopoly creates prices which increase slowly but continually. In addition, we discuss problems threatening the monopoly. However, the major problem is the durability of the diamond. This may cause the diamond monopoly to be threatened by an uncontrollable competitor - previous purchasers, as stated theoretically in the Coase conjecture.