Adopting blockchain technology to block less sustainable products’ entry in global trade

Yifan Cao and Bin Shen

Transportation Research Part E: Logistics and Transportation Review, 2022, vol. 161, issue C

Abstract: In this study, we examine how the use of blockchain technology deters less sustainable products’ entry (LSPE) in the cross-border supply chains in which the entrant produces less sustainable products and enters into the incumbent’s market. We identify that when the blockchain adoption cost exceeds a threshold, the entry can be blocked by mandatory blockchain adoption and the incumbent enjoys the monopoly position; when the blockchain adoption cost falls into an intermediate range, deterrence needs not only the use of blockchain technology but also price distortion by the incumbent; when the blockchain adoption cost is sufficiently low, the incumbent must compete with the entrant because blockchain technology is no longer effective for deterrence. Moreover, we examine how government intervention (tariff or subsidy) affects LSPE and find that both tariff and subsidy schemes can enhance the value of adopting blockchain technology to prevent LSPE. If the blockchain adoption cost is moderate, then levying tariffs on LSPE can achieve an economic and environment-dominating outcome, but the subsidy scheme cannot. Our findings provide managerial insights for cross-border supply chain managers and offer guidance to policy makers who design trade policies.

Keywords: Sustainability; Entry deterrence; Blockchain; Chain-to-chain competition; Global trade (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (18)

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DOI: 10.1016/j.tre.2022.102695

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