Platform's blockchain introduction strategy with considering competition between new and refurbished products

Abstract

As the second-hand market continues to grow, many retail platforms initially specializing in selling new products (e.g., Amazon, JD, and Walmart.com) have begun allowing refurbishers to directly sell refurbished goods on their platforms and gain additional profits. The platform can provide blockchain certification services for refurbishers to eliminate consumers' concerns about quality. In contrast to the existing literature, which primarily examines the introduction of blockchain technology from the perspective of cost factors, this paper investigates the platform's blockchain introduction in the context of competition between the new and refurbished products and its impacts on the manufacturer's and the refurbisher's profitability. Motivated by practices, two prevalent selling modes for the new product are considered: reselling mode (R) and agency selling mode (A). Even without considering the cost of blockchain, we find that the platform may have no incentive to introduce blockchain under both modes because it could trigger a severe cannibalization problem or an excessively high price for the refurbished product. The refurbisher (manufacturer) benefits with (without) blockchain under mode R, but this result occurs under mode A only when the blockchain service fee is low. We also discuss the welfare and environmental implications of blockchain. We find that the selling modes may modify the environmental implications of blockchain, but not the welfare implications of blockchain.