When Should the Platform adopt Blockchain Technology under the Transparency Awareness and Privacy Concerns?

Abstract

More and more companies promote their products as sustainable products, but many firms have been exposed to quality and safety issues, which makes consumer question the true quality of the ‘sustainable product’. The platform can adopt blockchain technology to attract more consumers by disclosing reliable product information to the consumer, but it will also result in a risk of privacy leakage through registering the blockchain. Hence, we consider a platform-based supply chain that includes a supplier and a platform. We investigate the pricing and information disclosure decision of the platform, then analyze the blockchain adoption strategy of the platform under the consumer’s transparency awareness and privacy concern. We find that when the transparency cost is sufficiently low, it is beneficial for the platform to adopt blockchain technology. Interestingly, blockchain adoption is beneficial for the supplier and the whole supply chain but hurts the platform under a certain threshold. Specifically, the platform is more sensitive to the increase in consumers’ privacy concerns and transparency costs compared to the retailer. This is because of the cost of information disclosure. Counterintuitively, when transparency awareness is high, the platform will even decrease the retail price as the increasing proportional cost of blockchain technology. Additionally, we find that there exists a ‘win-win-win’ strategy when transparency awareness is high, and privacy concern is low, in which the application of blockchain technology will benefit the supplier, platform, and consumers.