Traceability Decisions and Coordination Contracts in Agricultural Supply Chains Under Different Power Structures

Weixia Xue, Xiongyong Zhou () and Zhiduan Xu
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Weixia Xue: Tan Kah Kee College, Xiamen University, Zhangzhou 363105, China
Xiongyong Zhou: School of Economics and Management, Fuzhou University, Fuzhou 350108, China
Zhiduan Xu: School of Management, Xiamen University, Xiamen 361005, China

Sustainability, 2025, vol. 17, issue 21, 1-37

Abstract: Recent frequent food safety incidents have heightened consumer concern about agricultural product traceability, driving companies to build more robust supply chain traceability systems. However, enhancing traceability level is not only driven by consumer preferences but is also profoundly shaped by supply chain power structures and coordination mechanisms. In this study, we investigate how consumer preferences, power structures, and contractual mechanisms jointly shape traceability investment and coordination in agricultural supply chains. Using a two-tier supplier–retailer game-theoretic model, we compare traceability levels, pricing, and profit allocation under three governance structures: vertical Nash, supplier-led, and retailer-led. We also evaluate the effectiveness of cost-sharing and revenue-sharing contracts. The results reveal several key insights. First, consumer preference for traceable products serves as a critical market-driven force that enhances traceability investment across supply chain tiers. Second, power structures fundamentally determine traceability outcomes through threshold-dependent mechanisms: when consumer preference is weak, vertical Nash structures yield superior traceability via balanced cost-sharing; however, once preference intensity surpasses critical thresholds, retailer-led structures dominate in responsiveness, profit distribution, and capability building. In contrast, supplier-led structures deliver the weakest outcomes, as concentrated cost burdens suppress investment incentives, particularly in supply chains composed of small and medium-sized suppliers. Third, coordination contracts exhibit structure-specific efficacy. Cost-sharing contracts achieve full optimization in vertical Nash contexts and yield Pareto improvements in supplier-led chains, whereas traditional contracts exert minimal influence in retailer-led settings. These findings enrich our theoretical understanding of traceability governance and provide practical guidance for differentiated traceability design and contract formulation.

Keywords: agricultural supply chain; traceability; power structure; consumer preference; game-theoretic modeling (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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