Green investment in a sustainable supply chain: The role of blockchain and fairness

Publication Date

11-1-2022

Document Type

Article

Publication Title

Transportation Research Part E: Logistics and Transportation Review

Volume

167

DOI

10.1016/j.tre.2022.102908

Abstract

We study a green investment problem of a sustainable supply chain with one manufacturer who decides whether to implement blockchain and one retailer who has emotional fairness concerns. Although blockchain adoption is costly, it can raise customers’ green sensitivity level and exempt a firm from environmental taxes. A fair-minded retailer cares about disadvantageous inequity in addition to monetary payoffs. We compare the supply chain performance with and without blockchain, each in combination with and without emotional fairness concerns. We show that the manufacturer has the incentive to adopt blockchain if the operational cost is below a certain threshold, and this threshold increases in both tax rate and the blockchain-driven increment in customers’ green sensitivity. We find that fairness can encourage blockchain implementation if and only if the blockchain-driven increment in customers’ green sensitivity level is nominal. Moreover, blockchain adoption may weaken the positive impact of fairness on the supply chain performance such as the mitigation of double marginalization and consumer welfare improvement. We also find that blockchain can encourage green investment and benefit the retailer only if the blockchain-driven increment in customers’ green sensitivity level is relatively high; that is, an “all-win” situation for the supply chain can be achieved by blockchain adoption. Extended studies on consumption-based emission taxes and blockchain setup cost are also provided.

Funding Number

71832001

Funding Sponsor

National Natural Science Foundation of China

Keywords

Blockchain, Environmental taxes, Fairness concerns, Sustainable supply chain

Department

Global Innovation and Leadership

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