The Impact of Blockchain Technology on Green Investment Decisions for a Sustainable Supply Chain with an Overconfident Manufacturer

Abstract

Driven by the principles of green consumption and social responsibility, more companies are making strategic green investments by adopting blockchain technology to achieve sustainable development goals. However, in the real market, upstream manufacturers often tend to be overconfident. This can have a significant impact on decision-making processes and even influence other members within the sustainable supply chain. This paper investigates the influence of blockchain technology on investment decisions in sustainable supply chains for a manufacturer exhibiting overconfidence. We construct a supply chain with an overconfident manufacturer and a rational retailer and discuss the performance of supply chains by comparing two scenarios: without blockchain and with blockchain. First, we find that overconfident manufacturer can only benefit from blockchain adoption if the actual operating cost is below this threshold. Then, the maximum adoption cost acceptable to manufacturer increases with the carbon tax rate and the consumers’ green sensitivity coefficient. Furthermore, with blockchain, manufacturer is likely to make more profit as the level of overconfidence increases compared to the case without blockchain. We also found that the retailer benefits from adopting blockchain technology only when the manufacturer’s overconfidence is at a low level. Otherwise, only when the blockchain operating cost is less than a certain threshold can the retailer increase their revenue. Finally, we find that when the level of overconfidence increases, blockchain adoption can boost consumer surplus and social welfare.