Can blockchain implementation combat food fraud: Considering consumers’ delayed quality perceptions

Abstract

Food fraud is driven by unethical enterprises’ economic incentives and endures due to consumers’ delayed quality perceptions, while present solutions make it impossible for ethical firms to verify food quality in a timely and convincing manner. To that end, this paper focuses on a duopoly competition between an ethical firm (H) and an unethical firm (L) incorporating consumers’ delayed quality perceptions. Considering the industry credibility crisis that food fraud may trigger, we analytically explore the conditions and effects of firm H to combat food fraud with the aid of blockchain technology (BCT). Counterintuitively, this paper finds that quality improvements beyond industry standards are not always beneficial to firms. Indeed, firms H and L will adopt quality improvements only when marginal returns are higher or delayed perceived time of quality (DPTQ) is longer, respectively. When deciding whether to adopt BCT, H should consider not only the implementation cost and DPTQ, but also the non-monotonic impact of DPTQ on the cost threshold. In addition, it is found that the application of BCT will always motivate H to make quality improvements and further enhance the goodwill, demand, and profits, but that the effect of combating food fraud is stage-specific. Within DPTQ, BCT will only serve as a marketing tool to enhance the competitiveness of H. It is outside of DPTQ that BCT can be effective in combating food fraud, not only by accelerating L's exit from the market, but also by increasing H's market share at the same time.