Retailer's willingness to adopt blockchain technology based on private demand information

Abstract

<p style='text-indent:20px;'>This paper considers a supply chain that includes one supplier and one retailer, in which the retailer has a more accurate demand forecast. The blockchain technology can verify the authenticity of the information, then the retailer can choose to truly share the demand information with the supplier by adopting such a costly technology. We discuss three scenarios based on signaling game: the retailer bears all the cost (no subsidy), the supplier bears part of the cost by providing direct subsidy or wholesale discount, respectively. Specifically, in a demand information asymmetric setting, we mainly focus on exploring the conditions of retailer adopting blockchain technology and the supplier's subsidy strategy choice, and further verify the robustness of the model by considering the retailer's risk aversion or multiple suppliers. In all scenarios, we find that the retailer will apply threshold strategy to adopt blockchain technology. The retailer's willingness to adopt blockchain technology is negatively correlated with the corresponding adoption cost, the supplier's profit level, and positively correlated with the number of suppliers. Additionally, we find the supplier can profit from providing subsidies when the cost of adopting blockchain technology is around a medium level, and the direct subsidy is superior to wholesale discount. More surprisingly, we find subsidies may work to the disadvantage of the subsidized party. Specifically, compared to no subsidy, we find the direct subsidy and the wholesale discount can increase the retailer's willingness to adopt blockchain technology, but hurt the retailer's as well as the supply chain's profits.</p>