Organic production competitiveness: A bi-level model integrating government policy, sustainability objectives, and blockchain transparency

Abstract

The government subsidizes organic production to reduce the cost of production and encourage consumers to buy it. However, some organic producers do not adhere to organic production standards, which erodes customer confidence in these products. Companies use blockchain technology to display the entire production process to customers and increase transparency. This paper presents a bi-level model designed to investigate the competition between conventional and organic producers. The government wields more power than the producers and makes decisions at the upper level of the model. The demand function for each conventional or organic product is contingent upon the decisions made by its producer, as well as those made by competing producers, leading to competition at the lower level of the model. The model examines the effects of the government's role, the growth of export sales abroad, the type of information technology used in decision-making, and sustainable goals. The public and private versions of blockchain technology for organic production are compared in terms of transparency, costs, and environmental concerns. The proposed model is converted into a single-level model using the Karush-Kuhn-Tucker (KKT) approach. The results show that a combination of economic, social, and environmental goals can achieve a sustainable equilibrium. The comparison of blockchain technology scenarios shows that the utilization of private blockchains enhances producer profitability and reduces GHG emissions, albeit accompanied by an increase in additive usage. The sensitivity analysis of the public blockchain indicates that while consumers find an increased cost of use acceptable, it diminishes the economic appeal relative to private blockchain.