Pricing strategy and blockchain technology investment under hybrid carbon trading schemes: a biform game analysis

Blockchain technology (BCT) plays a pivotal role in ensuring cost-effective carbon trading and establishing customers’ trust. In this paper, we consider the combination of hybrid carbon trading schemes and blockchain technology and model a carbon trading supply chain, in which traditional and renewable energy manufacturers coexist. Within this supply chain, BCT adoption facilitates the recording of carbon trading information and simplifies the transaction process when traditional energy manufacturers procure Certified Emission Reductions (CERs) from renewable energy manufacturers. However, the substantial upfront investment costs pose a barrier to the widespread application of BCT in carbon trading processes. To address this, we introduce the cooperative investment strategy by proposing a novel biform game model framework combining the noncooperative and cooperative games, exploring the competitive strategies (the pricing strategies and BCT level decisions) and cooperative investment strategies within the same model. By comparing with noncooperative cases, in which the supply chain agents engage in BCT investment on a competition basis, our findings reveal several thresholds of competition intensity where cooperative-investment strategies induce Pareto improvements in economic performance and individual profits compared to non-cooperative strategies. These findings have significant implications for firms who adopt BCT to engage in carbon trading schemes.