Adopting blockchain technology to block less sustainable products? entry in global trade

In this study, we examine how the use of blockchain technology deters less sustainable products' entry (LSPE) in the cross-border supply chains in which the entrant produces less sustainable products and enters into the incumbent's market. We identify that when the blockchain adoption cost exceeds a threshold, the entry can be blocked by mandatory blockchain adoption and the incumbent enjoys the monopoly position; when the blockchain adoption cost falls into an intermediate range, deterrence needs not only the use of blockchain technology but also price distortion by the incumbent; when the blockchain adoption cost is sufficiently low, the incumbent must compete with the entrant because blockchain technology is no longer effective for deterrence. Moreover, we examine how government intervention (tariff or subsidy) affects LSPE and find that both tariff and subsidy schemes can enhance the value of adopting blockchain technology to prevent LSPE. If the blockchain adoption cost is moderate, then levying tariffs on LSPE can achieve an economic and environment-dominating outcome, but the subsidy scheme cannot. Our findings provide managerial insights for cross-border supply chain managers and offer guidance to policy makers who design trade policies.

Automated summary

This study examines how the use of blockchain technology can deter the entry of less sustainable products in cross-border supply chains. The findings show that mandatory blockchain adoption can block entry and give the incumbent a monopoly position if the adoption cost exceeds a threshold. When the adoption cost is in an intermediate range, both the use of blockchain technology and price distortion by the incumbent are needed for deterrence. However, if the adoption cost is sufficiently low, the incumbent must compete with the entrant as blockchain technology becomes ineffective for deterrence. Additionally, the study finds that government intervention through tariffs or subsidies can enhance the value of adopting blockchain technology to prevent the entry of less sustainable products.