Improving the reliability of the information disclosure in supply chain based on blockchain technology

Abstract

With many unethical companies have been exposed safety issues, consumers may also question the products of ethical companies without credible product information. Hence, we consider a two-echelon supply chain consisting of a supplier and a retailer (or two competing retailers), in which the supplier and the retailer can adopt blockchain technology to ensure credible product information. Two scenarios are developed – adopting blockchain technology (scenario B) or not (scenario N) – where the supplier needs to determine the information transparency level of the product. Our analysis shows that, in both monopoly and duopoly settings, as the maximum consumers’ willingness to pay increases, the total demand and the supplier’s profit may decrease when the consumers’ transparency awareness is large. As the product cost increases, the supplier will increase the wholesale price while the retailer will reduce the retail price when consumers’ awareness of transparency level is in an intermediate range. And the supplier can mitigate the loss of increased product cost by increasing the transparency level if and only if the transparency cost in scenario B is large. The conditions for the adoption of blockchain technology are closely related to the reliability of information and the cost of transparency. Additionally, when the product cost is in an intermediate range or when the cost of transparency is small, subsidy promotes the adoption of blockchain technology in the supply chain system significantly. In the presence of competition, we find that, an online retailer with weak market power can benefit both the offline retailer and the supplier.