Using Blockchain to Share Demand Forecasts in a Supply Chain

In this study, I explore the dynamics of a Cournot competition model involving two retailers and one manufacturer, focusing on the impact of blockchain technology on demand fore casting and profit sharing. By integrating blockchain for sharing demand forecasts among the participants, I investigate how this technology influences their profitability. My findings reveal that retailers opt to join the blockchain if the costs of participation are outweighed by the benefits of improved information access, leading to unconditional profit increases. Conversely, the manufacturer’s benefits from blockchain participation depend on two main factors: the level of uncertainty in aggregate demand and the intensity of competition in the retail market. Specifically, the manufacturer gains more when demand uncertainty is high and retail competition is low. This is because a less competitive retail market leads to higher aggregate orders from the retailers, compensating for the reduced volatility in demand. My study highlights the conditional benefits of blockchain technology in a Cournot competition setting, offering insights into strategic decision-making for manufacturers and retailers considering such technological investments.