The impact of platform restriction on manufacturer quality transparency in the blockchain era

Abstract

ABSTRACT This study investigates a supply chain comprising of a manufacturer and a retail platform, wherein the former decides the quality information transparency strategy of products and the latter determines whether or not to implement price parity clauses (PPCs). The manufacturer can directly sell the end-of-season product to the end-consumer market and indirectly via the retail platform. Specifically, this study considers two quality information transparency strategies (i.e. ex-ante blockchain-adoption and ex-post voluntary disclosure) that differ on whether the manufacturer’s decision on quality information transparency strategy is made before or after observing the actual product quality. Results show that the manufacturer may prefer the ex-ante blockchain-adoption strategy in specific conditions but maintains the flexibility of information disclosure under ex-post voluntary disclosure strategy. Moreover, the implementation of PPCs significantly reduces the manufacturer’s incentive to disclose a large extent of quality information transparency when the effort cost is high or the service effect coefficient is low. By contrast, the manufacturer is more likely to adopt information transparency strategies under PPCs when the effort cost is low and the service effect coefficient is high. More interestingly, contrary to theories of harm from PPCs, the implementation of PPCs may simultaneously benefit the manufacturer and retail platform, achieving a ‘win-win' situation.