Increasing willingness to pay in the food supply chain: a blockchain-oriented trust approach

Abstract

Food products' quality information is advertised on labels but do customers trust them? This study investigates how the consumers' Willingness-To-Pay (WTP) for food products can be increased by deploying managerial effort and advanced technologies, such as the Blockchain Technology (BT). Our model explains how revealing verified information about product quality throughout the supply chain will generate optimal consumers' WTP and maximise profit. At each echelon of a multi-echelon supply chain, a buyer holds a Bayesian belief about the quality of the input to be procured. This belief is shaped by the accuracy and veracity of the information about this quality. Managerial effort is required both to enhance quality as well as ensure full and verified information. We show why this effort must be made across the chain and how opportunistic behaviour may be circumscribed. Using empirically grounded analytics and real prices of olive oil intermediate produce from various official bodies, we show how the application of BT may be financially justified. This research shows how trust and WTP can be further enhanced through the use of BT and additional smart technologies in a supply chain, which may be projected on other supply chains of organic and sustainable food products.