Blockchain‐Driven Green Traceability: Greener or More Profitable?

ABSTRACT This study examines the strategic choices of two homogeneous green manufacturers regarding blockchain implementation, considering green traceability and spillover effect. We investigate how blockchain influences both economic and environmental benefits. Our findings reveal that the spillover effect can initially mitigate competition, benefiting early adopters by enhancing green innovation and market capabilities. This can lead to simultaneous profit enhancement for both manufacturers, challenging conventional competitive dynamics. Furthermore, the magnitude of the spillover effect significantly impacts adoption decisions. Low spillover leads to a prisoner's dilemma, where independent adoption is likely. Conversely, high spillover encourages simultaneous adoption, achieving a Pareto‐optimal equilibrium. Finally, while individual blockchain adoption may be more environmentally beneficial, simultaneous adoption generally leads to greater economic advantages. This highlights the potential trade‐off between economic and environmental outcomes in blockchain‐enabled manufacturing.