Impacts of blockchain technology with government subsidies on a dual-channel supply chain for tracing product information

Abstract

Transparent product information is a critical factor that promotes product sales. To satisfy the consumers’ expectation of product quality information, in practice, manufacturers (e.g., Beinmate, Aptamil, and Qiao’s compound) have adopted Blockchain Technology (BT) to help consumers trace the associated product information. In addition, the governments also encourage the application of BT by implementing relevant policies. This paper proposes a stylized dual-channel supply chain model to investigate the value added from adopting BT for manufacturers. We consider a setting that a manufacturer sells its product through two channels, i.e., offline retailer and online e-tailer. Under this circumstance, we find that the manufacturer is always willing to adopt BT to disclose product information. In particular, the offline retailer and consumers can receive benefits from this innovation, while the action is a double-edged sword for the online e-tailer. Moreover, under a special scenario that the government offers a quantity/innovation subsidy, we show that there exists a win–win–win situation for the manufacturer, the both selling channels, as well as the consumers. Finally, we compare the two subsidy policies and show that innovation subsidy can always achieve a better social welfare than quantity subsidy. Numerical examples are conducted to select the optimal subsidy policies and examine the extensions of this work.