Price competition and blockchain technology adoption strategies of agents on the digital platform.

Abstract

The rise of digital platforms intensifies the price competition among agents. Agents often use low price strategies to attract consumers. However, the low-price strategy is often filled with false information and consumers perceive the non-truthfulness of the price information. Then, consumers’ trust in agents gradually decreases, which inhibits the growth of online shopping. Blockchain is seen as a solution to the trust crisis between agents and consumers. Our research is based on two competing agents selling the same type of goods on the same platform. We discuss agents’ blockchain technology application strategies in three scenarios, which are defined by whether agents choose to apply blockchain technology to improve consumer trust. The results show that the application of blockchain technology is beneficial to agents only when consumer trust is low. Furthermore, the YN strategy is regarded as a possible equilibrium strategy, which depends on the blockchain application cost and consumer trust. Some extended cases are discussed for post-blockchain consumer welfare, cost-sharing contracts, dishonesty penalties, and variable blockchain costs, and the results show that the analysis in this manuscript is robust. Our findings have important practical significance for promoting the application of blockchain technology and alleviating the problem of price information asymmetry in platform shopping.