Blockchain and Supply Chains: V-form Organisations, Value Redistributions, De-commoditisation and Quality Proxies

Abstract

In this paper we apply institutional cryptoeconomics to the information problems in global trade networks, model the incentives under which blockchain-based supply chain infrastructure will be built, and make predictions about the future of supply chain governance. We propose that blockchain will not simply make supply chains more efficient, but might fundamentally change the patterns and dynamics of how, where and what we trade by: (1) facilitating new forms of economic organisation governing supply chain coordination (e.g. the V-form organisation); (2) shifting economic power towards the ends of supply chains (e.g. primary producers) by decreasing information asymmetries; (3) de-commoditising goods and disaggregating price signals by changing the dimensions along which goods may be reliably differentiated; and (4) lowering reliance on proxies (e.g. production within national borders) for the quality of goods. We also discuss the policy implications of blockchain-based supply chain infrastructure.