Diamond Districts

I have been in a lot of major cities in my lifetime, and several of them have a thriving diamond district. Click here to read an interesting take on why diamond shops in most major cities tend to locate close to each other.  The basic argument is that it lowers search and information costs for diamond customers.  I am not sure if this is totally correct.  Another possible reason why diamond shops may locate close to one another is that by being close together, they lower their joint security costs.  Given the density of diamond shops in one area, one would expect more cctv, police patrols etc..  Notably, all of the major diamond shops near Hatton Gardens in London are two minutes away from the nearest police station! 

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