Channel mode selection and blockchain strategy for a capital-constrained manufacturer

Abstract

We study the optimal channel selection and blockchain strategy of a capital-constrained manufacturer who sells the green product through an online platform. Blockchain technology (BCT) can be used by the manufacturer to increase consumer confidence in the value of green product. We first show that the manufacturer’s financing strategy is characterized by two thresholds that depend on the manufacturer’s channel selection and blockchain strategy. BCT increases wholesale and retail prices, but it does not always increase product greenness and demand. We find that the manufacturer’s ability to bear the blockchain cost correlates with his financial standing as well as the platform’s operation mode. Furthermore, we show that the agency mode should be selected by the manufacturer only when the commission rate falls below a specified threshold. We also examine the impact of commission rate on the platform’s operational strategy and channel consistency. Furthermore, under the agency model, we show that there is always a “win-win” situation in green cost-sharing cooperation regardless of the manufacturer’s financial state. However, such a “win-win” situation only exists in financing circumstances under the reselling mode. Finally, the extended model explores the relationship between channel strategies and risk preferences of the manufacturer under demand uncertainty.