Competing manufacturers blockchain technology adoption strategies for carbon emission misrepresentation under cap-and-trade regulation

Abstract

Under cap-and-trade regulation, manufacturers may misrepresent their carbon emissions to gain more profits. Blockchain technology can enhance the transparency and credibility of information, making it a suitable solution for addressing such misrepresentation. To investigate the impacts of misrepresentation of carbon emissions and blockchain technology on the production process among competing manufacturers, we develop three supply chain models based on various blockchain adoption strategies and analyze the equilibrium decisions for each member, as well as the cost threshold for adopting blockchain technology. The results indicate that both manufacturers tend to moderately overstate carbon emissions to enhance profitability, but it ultimately impedes the long-term sustainable development of the supply chain. Furthermore, adopting blockchain technology can significantly enhance the profitability, consumer surplus, and social welfare of the supply chain. As more manufacturers adopt blockchain technology, these benefits are further amplified. However, the adoption of blockchain does not consistently lead to favorable outcomes. An increase in product demand will inevitably lead to a rise in total carbon emissions. Meanwhile, blockchain technology will only be adopted by manufacturers if its operational costs fall within a specific range, which is approximately 12% of their profit levels. Manufactures should collaborate with reputable and highly skilled blockchain companies, while governments should also provide appropriate subsidies to support manufacturers. Moreover, implementing cap-and-trade regulation and increasing the trading price of unit carbon emission permit can serve as incentives for manufacturers to invest in green technology aimed at reducing total carbon emissions.