A blockchain-driven Pu-erh tea supply chain: product pricing and coordination mechanism design

Purpose The issue of counterfeiting has exerted a significant impact on the level of trust and collaboration within the Pu-erh tea supply chain. While digital identification methods have been implemented to mitigate counterfeiting, they offer only temporary remedies rather than comprehensive solutions. The emergence of blockchain technology presents an opportunity to address the traceability problem in the Pu-erh tea industry. However, the precise impact of blockchain on interfirm cooperation within Pu-erh tea supply chains remains unclear. Design/methodology/approach This research gap incentivizes our study, where we use game theory to propose stylized models for Pu-erh tea supply chains that capitalize on the trust-enhancing capabilities of blockchain technology. In our study, a factor called “trust degree” is introduced and its influence on the pricing of Pu-erh tea and the performance of the entire supply chain following the adoption of blockchain is examined. Findings The blockchain-driven Pu-erh tea supply chain could not reach Pareto improvement without intervention. A simple cost-sharing contract is not sufficient to enable coordination in the supply chain, while a hybrid contract with benefit-sharing and cost-sharing can be used to achieve this goal. Practical implications By comparing centralized and decentralized decision-making scenarios, we illustrate how blockchain can impact the performance along the entire Pu-erh tea supply chain. Finally, through numerical examples, we evaluate the value of cost-sharing contracts and benefit-sharing contracts and then propose a hybrid coordination mechanism to incentivize firm behaviour in the Pu-erh tea supply chain. Originality/value The framework uses a coordination mechanism that incentivizes the adoption of blockchain technology in the Pu-erh tea supply chain and offers valuable insights for the development of blockchain applications in food supply chain management.