Impact of blockchain technology on the optimal pricing and quality decisions of platform supply chains

Abstract

We investigate how blockchain technology influences optimal pricing and quality decisions under two different supply chain structures. In both cases, the supplier is the leader and plays a Stackelberg game with downstream platform(s). Specifically, the supplier determines the wholesale prices and quality levels of the products, and the platform(s) decides the selling prices. Based on our analysis, we find that when consumer acceptance of blockchain is low, among the two products in the single platform, the products with blockchain technology have not only a high quality but also a low price. However, in the case of the two competitive platforms, although blockchain will also enable the platform that uses this technology to provide products with a high quality and low price, its advantages are not obvious. Nevertheless, in comparing the two cases, when consumer acceptance is high, the two competing platforms tend to provide products with a high quality and low price, regardless of whether or not the products use blockchain technology. Our conclusions reveal that although blockchain will benefit a supplier and consumers, in some cases, the supplier will have an incentive to decrease the quality level of the products with blockchain technology, which will eventually negatively affect consumers.

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