Blockchain Adoption in Competing Retail Channels

Blockchain technology has been increasingly adopted in supply chains, offering new avenues for enhancing information transparency. This article investigates the role of blockchain in reducing consumer uncertainty, as well as its impact on competition between online and offline retailers under different market structures, using a game-theoretical approach. It highlights how blockchain enhances transparency and consumer trust, thereby influencing market dynamics and pricing strategies. The model incorporates consumer heterogeneity in terms of blockchain awareness and perceived product value, examining how these factors affect blockchain adoption decisions. A key finding reveals that blockchain can provide competitive advantages to online retailers, especially when consumer acceptance of the online channel is relatively low. Interestingly, if the online retailer adopts blockchain, higher mismatch costs could unexpectedly hurt profits. Moreover, our analysis shows that blockchain adoption does not necessarily benefit all retailers. Its effectiveness depends on consumer trust levels, awareness, and the magnitude of mismatch risks. Overall, this article offers managerial insights for retailers to tailor blockchain strategies based on market conditions, emphasizing the importance of consumer uncertainty and aligning blockchain’s benefits with specific market roles.