Cost Reduction Effect of Blockchain on the Strategies of Two Competing Manufacturers: Which Channel Alliance Is Optimal?

Abstract

To expand their market share, enter the market faster, and gain more sales opportunities, alternative manufacturers often choose to form alliances with incumbent supply chain companies. This paper considers a supply chain game structure composed of one incumbent manufacturer, one distributor, and one alternative manufacturer. It constructs a single-stage game model where the incumbent manufacturer sells products through two channels (direct sales and distribution). The study investigates whether the incumbent manufacturer deploys blockchain and whether the alternative manufacturer chooses to form an alliance. The research findings indicate that the incumbent manufacturer’s choice to deploy a blockchain mode is closely related to the dominant region in terms of cost reduction in blockchain deployment and the intensity of product price competition. Under the deployment of blockchain, choosing direct sales channels for product distribution is always the optimal choice for the incumbent manufacturer. Furthermore, in terms of overall supply chain profit, a direct sales channel alliance is more effective than a distribution channel alliance. Interestingly, the threshold curves for the alliance strategy’s dominance in overall supply chain profit and the alternative manufacturer’s choice between direct sales channel or distribution channel alliance both exhibit an “L”-shaped trend. Additionally, we extend the model from a dynamic game perspective and employ the dynamic evolutionary game method to determine the evolutionarily stable strategy threshold range for the alternative manufacturer’s choice of alliance strategy (direct sales or distribution) and the incumbent manufacturer’s choice of blockchain deployment strategy.