Retailer's willingness to adopt blockchain technology based on private demand information

Zhongbao Zhou; Xingfen Liu; Feimin Zhong; Yuan Cao; Long Zheng

doi:10.3934/jimo.2022087

Article Contents

2023, Volume 19, Issue 5: 3287-3328. Doi: 10.3934/jimo.2022087

This issue Previous Article Strategic service investment by retailers confronted by manufacturer encroachment Next Article The evolution of rectangular bin packing problem — A review of research topics, applications, and cited papers

Retailer's willingness to adopt blockchain technology based on private demand information

1.
School of Business Administration, Hunan University, Changsha 410082, China
2.
Hunan Trillion Trust Information Technology Co. Ltd, Changsha 410005, China

^*Corresponding author: Feimin Zhong (zhongfeimin@hnu.edu.cn)
^*Corresponding author: Feimin Zhong (zhongfeimin@hnu.edu.cn)

Received: September 2021

Revised: April 2022

Early access: June 2022

Published: May 2023

This research is supported by the National Natural Science of China under Grants (No:71771082, 71850012, 72171077), Hunan Provincial Key Laboratory (No. 2020TP1013), National Social Science Foundation of China (No.19AZD014)

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Abstract

This paper considers a supply chain that includes one supplier and one retailer, in which the retailer has a more accurate demand forecast. The blockchain technology can verify the authenticity of the information, then the retailer can choose to truly share the demand information with the supplier by adopting such a costly technology. We discuss three scenarios based on signaling game: the retailer bears all the cost (no subsidy), the supplier bears part of the cost by providing direct subsidy or wholesale discount, respectively. Specifically, in a demand information asymmetric setting, we mainly focus on exploring the conditions of retailer adopting blockchain technology and the supplier's subsidy strategy choice, and further verify the robustness of the model by considering the retailer's risk aversion or multiple suppliers. In all scenarios, we find that the retailer will apply threshold strategy to adopt blockchain technology. The retailer's willingness to adopt blockchain technology is negatively correlated with the corresponding adoption cost, the supplier's profit level, and positively correlated with the number of suppliers. Additionally, we find the supplier can profit from providing subsidies when the cost of adopting blockchain technology is around a medium level, and the direct subsidy is superior to wholesale discount. More surprisingly, we find subsidies may work to the disadvantage of the subsidized party. Specifically, compared to no subsidy, we find the direct subsidy and the wholesale discount can increase the retailer's willingness to adopt blockchain technology, but hurt the retailer's as well as the supply chain's profits.

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Mathematics Subject Classification: Primary: 91A27, 90B06; Secondary: 91A28.

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Figure 1. Equilibrium point $ \xi_i $ (where $ i = 0, 1, 2 $) with different values of $ CR $ and $ M $

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Figure 2. The retailer's expected profit $ \Pi_r $ under different scenarios

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Figure 3. Direct subsidy $ H $ and wholesale discount $ \delta $

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Figure 4. Sketch of the active region for the direct subsidy and wholesale discount

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Figure 5. Rough sketch structure of different threshold when $ M $ is in an intermediate range

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Figure 6. $ \Pi_s $ difference between three scenarios with different values of $ CR $ and $ M $

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Figure 7. $ \Pi_r $ difference between three scenarios with different values of $ CR $ and $ M $

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Figure 8. The profit ratio $ \rho \left({\Pi^{ds}}/{\Pi^{cs}}, {\Pi^{A}}/{\Pi^{cs}}, {\Pi^{B}}/{\Pi^{cs}}, {\Pi^{C}}/{\Pi^{cs}}\right) $

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Figure 9. Profits as a function of risk-adjusted profit margin

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Figure 10. Profits as a function of degree of forecast information asymmetry

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Figure 11. The decision-making process

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Table 1. Number of suppliers

The retailer	Number of suppliers from 'qcc.com'	Number of suppliers from 'tianyancha.com'	Average number of suppliers	Whether to use blockchain technology (using 1, not 0)
Wal-Mart	154	134	144	1
YONGHUI	47	47	47	1
Amazon	15	14	14.5	1
China Resources Vanguard Shop	18	12	15	0
Minnings	14	24	19	0
Miniso	12	9	10.5	0
Lianhua Supermarket	7	5	6	0
Watsons	5	6	5.5	0
Metro AG	33	31	32	0
RT-MART	54	54	54	0
Hyper-mart	75	57	66	0
Auchan	45	33	39	0
Wumart	7	6	6.5	0
JIAJIAYUE	43	29	36	0

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