Price and Product Quality Decisions for a Two-Echelon Supply Chain in the Blockchain Era

Abstract

Frequent problems of counterfeiting have spawned consumer demands to monitor the entire supply chain. The application of blockchain technology with anti-counterfeiting and traceability can improve the reliability and authenticity of product information and eliminate consumer doubts about product quality. Furthermore, based on the transparency of blockchain technology, brand suppliers can independently obtain the market demand information through information sharing. This paper introduces a consumer suspicion coefficient to illustrate the application of blockchain technology in the supply chain. Considering product authenticity verification and information sharing, we study the optimal pricing and product quality decisions in a two-level supply chain under the following three scenarios: (1) no blockchain technology, a traditional supply chain, and no information sharing (case TN); (2) no blockchain technology but a traditional supply chain with information sharing (case TS); and (3) a supply chain based on blockchain technology (case BT). We find that when the consumer suspicion coefficient increases, consumers will have limited faith in the authenticity of the product, which will affect the retailer’s optimal decision and profit. By comparing the equilibrium results of several cases, we also find that demand information sharing by the retailer may not achieve a win-win outcome in a decentralized channel in the absence of blockchain technology. Under demand information sharing based on blockchain technology, however, if the consumer suspicion coefficient exceeds a certain threshold, the brand supplier and retailer can achieve a win–win outcome. In addition, the extended models reveal that in a centralized supply chain, regardless of the state of market demand, blockchain technology can always improve product quality and retail price and optimize supply chain profit.

Design of Data Sharing Platform Based on Blockchain and IPFS Technology

“…On the hardware, the server maintains the blockchain and hash tables through memory resources. As the amount of blockchain data continues to increase, memory consumption is reduced by deleting the blocks generated earlier and only retaining the new blocks, thus ensuring timely modification of the data in the event of a fork in the blockchain [9]. At the same time, the server also needs to provide large In software, each node in the background maintains an array of IP addresses and port numbers of other nodes.…”

Recent Advances of Blockchain and Its Applications

“…Zhou et al [253] and Sun et al [254] conducted detailed analysis and proof on the cost of blockchain in twoechelon supply chain where only one supplier and one retailer exist. Zhou et al [253] pointed out that, blockchainenabled supply chains are not necessarily superior than non-blockchain ones, which is closely related to the reliability of information and the transparency cost of products.…”

“…Zhou et al [253] and Sun et al [254] conducted detailed analysis and proof on the cost of blockchain in twoechelon supply chain where only one supplier and one retailer exist. Zhou et al [253] pointed out that, blockchainenabled supply chains are not necessarily superior than non-blockchain ones, which is closely related to the reliability of information and the transparency cost of products. Based on full equilibrium results through the Stackelberg game between the supplier and the retailer designed in the paper, the authors concluded that the retailer can tolerate higher blockchain adopting cost than supplier in most cases especially when the product cost is high, while supplier can tolerate a higher adopting cost only when both the product cost and consumers' willing to pay are low.…”

“…Researchers may result in opposite conclusions when modeling and scenario settings differ. Zhou et al [253] thought both supplier and retailer will benefit from blockchain technology when the adopting cost is low enough, while Sun et al [254] concluded blockchain technology can always improve the supply chain profit no matter what the status of market demand.…”

Prediction of Mutual Interdependencies Among the Drivers of Blockchain for Enhancing the Supply Chain Dynamics

“…Validation of transactions is achieved through a process called mining which ensures trust and security. Middlemen's removal will lead to reduced corruption and fair pricing of products (Sun et al 2022).…”