Vertical Information Sharing in a Blockchain-Enabled Supply Chain

Abstract

While previous studies have examined how blockchain adoption affects stakeholders’ decision-making, the vertical demand information-sharing among supply chain members within a blockchain framework remains underexplored, which raises the question of how a blockchain-enabled retailer shares the demand information and how the blockchain technology may work in a supply chain. This study investigates the impacts of introducing blockchain technology on the information-sharing strategy and equilibrium choice. We find that, in the scenario of blockchain technology, information sharing may not occur when the product quality is higher since sharing may benefit the upstream and hurt the downstream. When the quality is lower, information sharing can be better off for all members given the conditions: 1) the market dispersion is larger or 2) the market dispersion is smaller and the cost is higher. In the scenario of no information-sharing, the implementation of blockchain technology is always better off for the supplier due to the increase in the wholesale price and order quantity, while conditionally benefiting the retailer if the implementation cost of blockchain technology is lower. We also find that consumer surplus is lowest in the case of no information-sharing and no blockchain because of the higher price and nontraceability of information.