Blockchain Adoption Dilemma Under Brands Competition

Abstract

This study examines the blockchain adoption decisions of national brand manufacturers and retail platforms when the latter develop store brands. The supply chain includes an upstream national brand manufacturer and a downstream retail platform. Four blockchain adoption scenarios are analyzed: both brands adopt blockchain, neither adopts, only the national brand adopts, and only the store brand adopts. The prevalence of store brands has grown, yet consumers often view their quality as lower than that of national brands. Blockchain's traceability and immutability can enhance quality management and the reliability of quality information. This study explores the conditions under which manufacturers and platforms with store brands adopt blockchain, factoring in adoption costs. Using Stackelberg game theory, we find that the adoption of blockchain depends on adoption costs, demand uncertainty, and channel competition. Low adoption costs may lead to a "certainty premium effect," boosting prices and sales. High adoption costs and demand uncertainty can trigger a "transfer premium effect," where one party's adoption benefits the other brand. When demand uncertainty, and competition are both high, manufacturers may face a "competitive blockchain trap," with biased platform promotion and intense competition reducing expected utility despite higher revenues. Ultimately, blockchain adoption is not always optimal, and allowing the other brand to adopt may not be detrimental. This study offers insights for national brand manufacturers and platforms with store brands on blockchain adoption. Given the decision's complexity, managers should consider adoption costs, channel competition, and demand uncertainty.

Keywords: Blockchain adoption, Platform, Store brand, Reselling, Game theory