The Choice Strategy of Authentication Technology for Luxury E-Commerce Platforms in the Blockchain Era

Abstract

Blockchain technology, as an emerging information technology, has attracted much attention. Some luxury e-commerce platforms have focused on the adoption of blockchain technology to provide electronic certificates for consumers, which helps to increase consumers’ trust in luxury goods. However, due to the high authentication cost of blockchain technology, some platforms still adopt manual technology with lower authentication costs to provide paper certificates for consumers. So whether platforms choose to adopt manual technology or blockchain technology for authentication is a problem worthy of attention. In this article, we investigate the choice strategy of authentication technology for luxury e-commerce platform(s) in the monopoly and duopoly markets, respectively. The results show that the choice of authentication technology for platform(s) depends on the cost difference between manual technology authentication and blockchain technology authentication. When the cost difference is small (large), platform(s) should adopt blockchain (manual) technology. In particular, in the duopoly market, the competition between the two platforms will improve their motivation to adopt blockchain technology, but the two platforms may trap into a prisoner's dilemma when they both adopt blockchain technology. Moreover, in the monopoly and duopoly markets, adopting blockchain technology is likely to improve consumer surplus and social welfare at the same time.