Blockchain’s role in e-commerce sellers’ decision-making on information disclosure under competition

Abstract

In e-commerce, sellers can disclose product information (such as quality, size information, function, and so on) to make consumers understand the products. However, in the process of information disclosure, consumers often fall into information distortion or information loss. Because of its immutability and traceability, blockchain can help e-commerce sellers improve information disclosure and ensure the efficiency of information transmission. We study a duopoly competitive e-commerce market in which two e-commerce sellers compete in information disclosure. According to whether to apply blockchain, we divide the sellers’ decision-making into four research scenarios (NN, BN, NB, BB). Based on the above four scenarios, we get the market demand of different products depending on the consumer utility, and further establish the game model in the competitive environment. This paper explores the impact of blockchain on information disclosure and consumer surplus, and achieves the Nash equilibrium of blockchain application for both sides. In the expansion model, we study e-commerce sellers’ risk aversion and capital constraints, and further explore their impact on blockchain in practice. Finally, combining with blockchain’s characteristics, we also analyze the impact of the application of blockchain at other aspects on the supply chain. We find that when consumers' trust in information is low or the cost of blockchain applications is low, all e-commerce sellers in competition will adopt blockchain. In addition, when consumers have low trust in information, it will be difficult to achieve complete equilibrium in the application of blockchain as their risk aversion increases. For capital constrained sellers, when the cost of blockchain application is low, it will be difficult to achieve full equilibrium for blockchain applicants as the bank financing rate increases.