Turn a blind eye? E-tailer's blockchain participation considering upstream competition between copycats and brands

Baozhuang Niu, Yiyuan Ruan and Haotao Xu

International Journal of Production Economics, 2023, vol. 265, issue C

Abstract: E-tailers such as Amazon and JD.com have long been criticized for the co-existence of copycat and genuine products sold on their platforms. Although many brands have developed blockchain-based digital manufacturing systems which can enable the traceability of genuine products, consumers could not identify the genuine products without the e-tailers’ participation in the blockchain: A well-behaved blockchain requires the digital connection of the upstream (i.e., the brand) and the downstream (i.e., the e-tailer). We hence build a game-theoretical model to analyze the e-tailers’ incentives to participate in the upstream brand's blockchain, which guarantees the consumers' trust but the e-tailer's revenue shared from the copycat sales might be reduced. The e-tailers operate under a hybrid mode where the copycat products are sold in agency stores and the genuine products are sold in the e-tailers’ reselling stores. We find that the brand's efficient image investment helps incentivize the e-tailer to connect to the upstream brand's blockchain-based manufacturing system. And the e-tailer's blockchain participation induces the genuine product's larger market share by enhancing its diversified competition with the copycat. Otherwise, the e-tailer still tends to participate in the brand's blockchain if its commission rate from the copycat store is low and the e-tailer's reselling channel advantage is limited.

Keywords: Blockchain (digital) manufacturing; Copycat combating; E-tailer operations; Supplier competition; Channel competition (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:265:y:2023:i:c:s0925527323002414

DOI: 10.1016/j.ijpe.2023.109009

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