Blockchain’s impact on platform supply chains: transaction cost and information transparency perspectives

Abstract

ABSTRACT This study examines the impact of blockchain technology on platform supply chains from the perspectives of information transparency and transaction cost. We build a hybrid-format supply chain in which one supplier adopts an agency selling format and sells a product through the platform by paying a commission fee, while the other supplier adopts a reselling format. A game theory model is adopted to solve the key question: What is the best blockchain strategy for each supply chain member? Our research shows that blockchain technology can be a powerful weapon for platforms to adjust prices and control the market. As for the two suppliers in our supply chain, they will become better off with blockchain technology due to the elimination of information asymmetry and transaction costs. Moreover, the optimal strategies for platforms strongly depend on transaction cost, commission rate, and blockchain’s operation cost. Furthermore, we also provide a side-payment contract to help different players achieve Pareto improvement, thus reaching a win-win-win outcome. Our findings not only provide guidance for the adoption of blockchains in the platform economy but also complement the gap in research on information sharing.