Price Game Model and Competitive Strategy of Agricultural Products Retail Market in the Context of Blockchain

Abstract

ObjectiveIn the retail market for agricultural products, consumers are increasingly concerned about the safety and health aspects of those products. Traceability of blockchain has emerged as a crucial solution to address these concerns. Essentially, a blockchain functions as a dynamic, distributed, and shared database. When implemented in the agricultural supply chain, it not only improves product transparency to attract more consumers but also raises concerns about consumer privacy disclosure. The level of consumer apprehension regarding privacy will directly influence their choice to purchase agricultural products traced through blockchain-traced. Moreover, retailers' choices to sell blockchain-traced produce are influenced by consumer privacy concerns. By analyzing the impact of blockchain technology on the competitive strategies, pricing, and decision-making among agricultural retailers, they can develop market competition strategies that suit their market conditions to bolster their competitiveness and optimize the agricultural supply chain to maximize overall benefits.MethodsBased on Nash equilibrium and Stackelberg game theory, a market competition model was developed to analyze the interactions between existing and new agricultural product retailers. The competitive strategies adopted by agricultural product retailers were analyzed under four different options of whether two agricultural retailers sell blockchain agricultural products. It delved into product utility, optimal pricing, demand, and profitability for each retailer under these different scenarios. How consumer privacy concerns impact pricing and profits of two agricultural product retailers and the optimal response strategy choice of another retailer when the competitor made the decision choice first were also analyzed. This analysis aimed to guide agricultural product retailers in making strategic choices that would safeguard their profits and market positions. To address the cooperative game problem of agricultural product retailers in market competition, ensure that retailers could better cooperate in the game, blockchain smart contract technology was used. By encoding the process and outcomes of the Stackelberg game into smart contracts, retailers could input their specific variables and receive tailored strategy recommendations. Uploading game results onto the blockchain network ensured transparency and encouraged cooperative behavior among retailers. By using the characteristics of blockchain, the game results were uploaded to the blockchain network to regulate the cooperative behavior, to ensure the maximization of the overall interests of the supply chain.Results and DiscussionsThe research highlighted the significant improvement in agricultural product quality transparency through blockchain traceability technology. However, concerns regarding consumer privacy arising from this traceability could directly impact the pricing, profitability and retailers' decisions to provide blockchain-traceable items. Furthermore, an analysis of the strategic balance between two agricultural product retailers revealed that in situations of low and high product information transparency, both retailers were inclined to simultaneously offer sell traceable products. In such a scenario, blockchain traceability technology enhanced the utility and profitability of retail agricultural products, leading consumers to prefer purchase these traceable products from retailers. In cases where privacy concerns and agricultural product information transparency were both moderate, the initial retailer was more likely to opt for blockchain-based traceable products. This was because consumers had higher trust in the initial retailer, enabling them to bear a higher cost associated with privacy concerns. Conversely, new retailers failed to gain a competitive advantage and eventually exit the market. When consumer privacy concerns exceeded a certain threshold, both competing agricultural retailers discovered that offering blockchain-based traceable products led to a decline in their profits.ConclusionsWhen it comes to agricultural product quality and safety, incorporating blockchain technology in traceability significantly improves the transparency of quality-related information for agricultural products. However, it is important to recognize that the application of blockchain for agricultural product traceability is not universally suitable for all agricultural retailers. Retailers must evaluate their unique circumstances and make the most suitable decisions to enhance the effectiveness of agricultural products, drive sales demand, and increase profits. Within the competitive landscape of the agricultural product retail market, nurturing a positive collaborative relationship is essential to maximize mutual benefits and optimize the overall profitability of the agricultural product supply chain.

Keywords

• blockchain
• supply chain
• retailers of agricultural products
• consumer privacy
• game theory