Blockchain adoption of pharmaceutical firms in a competitive market: Pricing, drug traceability and consumer awareness

Yajie Sun, Fan Wang and Xiaopo Zhuo

International Journal of Production Economics, 2024, vol. 276, issue C

Abstract: To cope with counterfeit drugs reaching consumers all over the world, pharmaceutical firms increasingly regard blockchain technology (BCT) as a promising solution to achieve drug traceability. This study proposes a game-theoretic model to investigate the impact of BCT adoption on pharmaceutical firms’ pricing and performance in a competitive market, where one firm offers a branded drug and the other offers a generic version. We consider three contrastive cases with no BCT adoption, unilateral BCT adoption of the branded drug firm and bilateral BCT adoption and characterize consumer traceability awareness, which represents the fraction of consumers sensitive to drug traceability. We find that when BCT is unilaterally adopted, a high consumer traceability awareness level may lead to either higher or lower drug prices. The bilateral adoption of BCT always benefits the generic drug firm due to the enhanced drug traceability, but may damage the branded drug firm attributed to the mitigated differentiation between the two drugs. Compared with the unilateral adoption of BCT, bilaterally adopting BCT can lead to a win-win or lose-lose outcome, depending on the trade-off of drug traceability, drug differentiation and pricing competition. In addition, the adoption of BCT improves consumer welfare when consumers hold a high level of traceability awareness.

Keywords: Blockchain technology; Pharmaceuticals; Pricing; Traceability; Consumer awareness (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527324002135
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:276:y:2024:i:c:s0925527324002135

DOI: 10.1016/j.ijpe.2024.109356

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().