The impact of consumer skepticism on blockchain-enabled sustainability disclosure in a supply chain

Abstract

The growing recognition of sustainable supply chain practices is indisputable. Nevertheless, consumer skepticism regarding the credibility of product sustainability information, which includes environmental impact and social responsibility, poses a significant challenge. Blockchain-enabled disclosure has surfaced as a promising approach to address this skepticism. In this paper, a game-theoretical model is developed to investigate the investment strategy in blockchain-enabled disclosure within a supply chain composed of one retailer and two manufacturers, each selling products with varying levels of sustainability. Considering consumer skepticism, we assume that consumers who trust sustainability information are willing to pay a premium for sustainable products, while skeptical consumers are not. Our analysis suggests that blockchain-enabled disclosure can effectively increase consumer trust in sustainability information and promote sustainable practices. However, our findings reveal a potential pitfall: intensified market competition between manufacturers, leading to reduced profits for both, while the retailer persistently benefits from blockchain-enabled disclosure. Furthermore, we find non-monotonic effects of consumer skepticism on retailer and manufacturer profits, with certain conditions resulting in a decreased likelihood of investing in blockchain-enabled disclosure as skepticism increases. Lastly, we examine the government-mandated disclosure policy, illustrating that such policy can generate a win–win situation for society and the environment by improving social welfare and environmental performance.