Is blockchain technology desirable? When considering power structures and consumer preference for blockchain

Abstract

Blockchain technology is very useful for combating counterfeits and verifying the authenticity of products for consumers. This paper studies blockchain adoption in a two-level supply chain consisting of a brand supplier and a retailer. Our contribution using the game-theoretic framework is to consider the various preferences that consumers may have for blockchain-supported products and to investigate the value and effects of blockchain in a traditional wholesale channel with different power structures and a platform-based-agent selling channel. We confirm that consumer aversion to blockchain will lower retailer incentive to adopt blockchain, while the opposite will occur if consumers are interested in blockchain. We find that the market leader with power advantage is more motivated to adopt blockchain while the follower has less motivation. We also find that the brand supplier will be willing to move to the agent selling channel if the unit cost of the blockchain is low and the platform commission rate is medium. Moreover, an interesting finding is that blockchain can achieve a win–win-win outcome for the brand supplier, retailer, and consumers under a certain critical threshold, which may cause unfair distribution of supply chain profit and may also be detrimental to the establishment of agent selling.