Optimal Supply Chain Incentives to Reduce Emissions Under Blockchain Technology: Tax or Subsidy

Blockchain technology is increasingly adopted in supply chains to record product carbon footprints and environmental attributes on tamper-resistant ledgers. By improving the transparency and verifiability of emission-related information for governments, firms and consumers, blockchain reshapes the incentive effects of environmental taxes and subsidies that target emission abatement. This paper presents a government-manufacturer-consumer tripartite game model to analyze the abatement effects of tax and subsidy policies and their differences under heterogeneous consumer demand in a blockchain-driven framework. The results indicate that: (1) Both subsidy and tax policies can facilitate environmental improvement. When consumers’ green preference exceeds a specific threshold X*/1+γ, the greenness of the tax policy is superior to that of the subsidy policy, and vice versa. (2) Under blockchain technology, tax and subsidy instruments differentially affect the profits of conventional and green manufacturers, shifting profits from high-emission sectors to green sectors. (3) The improvement of consumers’ environmental awareness can gradually reduce the implementation of the policy, urge enterprises to reduce emissions, and improve their profits. Nevertheless, the privacy concerns associated with blockchain technology present a significant obstacle to the effective implementation of carbon emission reduction strategies.