Permissioned Blockchain Adoption in Supply Chains

We aim to identify factors that are critical in determining whether or not blockchain adoption arises in various market structures, and give guidance for addressing the challenges of blockchain implementation. In Chapter 2, we construct an economic framework for understanding the incentives of the firms in a supply chain to form a blockchain consortium. We find that blockchain reduces information asymmetry for consumers, thereby enhancing consumer welfare. Consumer welfare gains can be sufficiently large that blockchain adoption is socially beneficial; nonetheless, we find that blockchain adoption does not arise in equilibrium. This situation arises because blockchain adoption costs are borne by manufacturers, and manufacturers cannot extract consumer gains through prices due to the competitive nature of the manufacturing sector. We offer a system of transfers to generate blockchain adoption in equilibrium when it is socially beneficial. In Chapter 3, we investigate a variation of the model described in Chapter 2. Our analysis incorporates the blockchain’s ability to trace shipments and generate cost savings for the manufacturers who join the blockchain. Although the blockchain ena