IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v326y2025i3p467-480.html
   My bibliography  Save this article

Truth, trust, and trade-offs: When blockchain in supply chains backfires

Author

Listed:
  • Avinadav, Tal
  • Shamir, Noam

Abstract

We study the role of blockchain in achieving information transparency and generating trust in a dyadic supply chain with one retailer sourcing from a single supplier. The retailer has superior information regarding the demand distribution, whereas the supplier sets the capacity in preparation for the selling season. Two sources of risk are identified: information risk, which captures the incentives of the retailer to portray a favorable market condition to the supplier to encourage the supplier to secure an ample capacity, and demand risk, which captures the potential for lost sales or excess capacity investment, even when knowing the correct demand distribution. We demonstrate how blockchain eliminates information risk for the supplier. As an alternative to blockchain, we analyze a commitment contract where the retailer can order in advance a certain number of units; this commitment can serve as a signaling tool to convey market information to the supplier. We argue that the commitment contract can eliminate the information risk for the supplier (as can blockchain), but it can also reduce the supplier’s demand risk. We conclude that in many instances, the supplier and the supply chain can become worse off when blockchain is used, while the retailer favors this technology.

Suggested Citation

  • Avinadav, Tal & Shamir, Noam, 2025. "Truth, trust, and trade-offs: When blockchain in supply chains backfires," European Journal of Operational Research, Elsevier, vol. 326(3), pages 467-480.
  • Handle: RePEc:eee:ejores:v:326:y:2025:i:3:p:467-480
    DOI: 10.1016/j.ejor.2025.05.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221725003650
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.ejor.2025.05.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:326:y:2025:i:3:p:467-480. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.