Certifying Greenness: Blockchain’s Impact on Eco-Friendly Products in a Competitive Market

Abstract

The competitive dynamics between conventional and environmentally conscious goods have been transformed by the implementation of blockchain technology to authenticate the environmental sustainability of different products. Using game theory, we explore the influence of blockchain integration on the rivalry between eco-friendly and non-eco-friendly products sold by two retailers, respectively. We introduce duopoly pricing models to address this concern. One model is designed for an environmentally conscious product firm that utilizes blockchain technology to authenticate the sustainability attributes of its offers. The other model is applicable to a traditional product firm. To evaluate the reliability of our findings, we expand our models to encompass two critical variables, i.e., the cost of blockchain adoption and exogenous decisions concerning product quality. Our analysis reveals that the eco-friendly product firm that embraces blockchain does not enjoy the advantages of expanding its eco-conscious customer base. Paradoxically, an increase in such consumers intensifies the competition between two products. Additionally, our research indicates that although blockchain implementation can alleviate this competition, the use of blockchain for certification does not necessarily enhance the competitiveness of the eco-friendly product. To secure a competitive edge over the non-eco-friendly product through blockchain adoption, the eco-friendly product firm must possess substantial bargaining power.

Keywords

• Blockchain
• greenness certification
• competitive pricing
• green product
• supply chain