Decision-making in low carbon supply chains: A blockchain-based LCSP perspective and a differential game model

Abstract

Blockchain technology has reshaped how members of supply chains transfer information, effectively avoiding the phenomenon of information silos and helping to improve the emissions reduction performance and profit of each subject in the supply chain. It is now critical to understand how supply chain members can be encouraged to collaboratively invest in low-carbon service platforms based on blockchain technology to realise chain-wide systematic carbon reduction. In this regard, considering the time-dynamic characteristics of enterprise emissions reduction, this paper establishes a differential game model of collaborative emissions reduction in a low-carbon supply chain composed of a Stackelberg leader manufacturer and a supplier. We compare and analyse the four investment decision scenarios regarding whether the supplier and manufacturer invest in the blockchain low-carbon service platform under decentralised decision-making, as well as the equilibrium solutions of supply chain members under centralised decision-making scenarios by solving the Hamilton function. Finally, we introduce a bilateral cost-sharing contract to make the supply chain perfectly coordinated. We find that the significant unit return is an important incentive for supply chain members to take the lead in investing in a low carbon service platform (LCSP). In this regard, when only one member invests, the other one demonstrates free-riding behaviour. Under centralised decision-making, the supply chain can achieve Pareto optimality, and the bilateral cost-sharing contract can achieve perfect coordination of the supply chain, which is the best choice for the decision-makers of low-carbon supply chains. As the influence level of the LCSP gradually increases from small to large, the optimal decision-making of supply chain members gradually transitions from waiting for the right time to ‘hitchhike’ to a strong willingness to cooperate. This study is of great reference value and practical significance for economic entities to improve profits, promote systematic carbon reduction in the whole chain and promote the sustainable development of low-carbon supply chains.