The Role of blockchain in Enhancing Transparency and Sustainability in Green Products

Introduction: The Urgency of Carbon Emission Reduction

In recent years, the surge in industrial growth has drawn significant attention to carbon emissions, primarily due to their role in exacerbating global warming and climate change. The Intergovernmental Panel on Climate Change (IPCC) has urged governments globally to implement substantial measures aimed at reducing carbon emissions by 70% by the year 2050. In response, various countries and regions have set ambitious targets for carbon reduction. For example, the United States aims to cut emissions by 26% to 28% from 2005 levels by 2025. Meanwhile, the European Union has established a legal framework through the European Climate Law, adopted in 2021, to achieve carbon neutrality across its member states. Additionally, China has set a goal to peak its carbon emissions by 2030 and reach carbon neutrality by 2060.

The Importance of Carbon Labeling

One of the strategies gaining traction in promoting a low-carbon lifestyle is the implementation of carbon labeling policies. These policies require products to display their carbon footprints, offering consumers clear insights into the environmental impact of their purchases. By providing this information, carbon labels empower consumers to make more environmentally conscious choices, thereby increasing demand for low-carbon products. This heightened awareness also encourages manufacturers to adopt sustainable practices, invest in green technologies, and reduce greenhouse gas emissions.

Consumer Skepticism and Information Asymmetry

Despite the increasing availability of green products, many consumers remain skeptical about their true value due to information asymmetry. This gap in knowledge often leads to doubts regarding the actual environmental benefits of these products, with some consumers fearing they may be victims of greenwashing—where companies falsely advertise their products as eco-friendly. Such uncertainty can diminish consumers’ willingness to pay a premium for green goods, ultimately affecting market dynamics and the broader adoption of sustainable practices.

blockchain Technology: A Solution to Information Gaps

The advent of blockchain technology presents a promising solution to these challenges. By offering a decentralized and transparent ledger, blockchain can ensure comprehensive traceability and verification of product information throughout the supply chain. This technology can document detailed data regarding production processes, raw materials, and sustainability practices associated with green products. Consumers can access verifiable information about a product’s environmental impact and authenticity by scanning a blockchain-enabled QR code. This level of transparency equips consumers with the knowledge necessary to make informed purchasing decisions, effectively bridging the information gap between producers and consumers. Furthermore, blockchain‘s capacity for real-time updates and secure historical records enhances consumer trust in green products, while also motivating manufacturers to uphold high environmental standards.

Technological Disparities Among Manufacturers

Manufacturers that leverage advanced technology may be better positioned to attract consumers by adopting blockchain and investing in green technologies. These technologically adept manufacturers can enhance product transparency and improve the green attributes of their offerings. Conversely, manufacturers lacking technological resources may resort to price competition to draw consumers, as they cannot provide the same value in terms of sustainability. The increased market demand driven by blockchain and green technology investments can be understood through the “reduction effect,” which highlights the appeal to environmentally conscious consumers. Additionally, the “price effect” reflects how product differentiation stemming from technological disparities influences consumer price sensitivity.

Strategic Considerations for Manufacturers

Given these dynamics, how should manufacturers with varying technological capabilities balance the “price effect” against the “reduction effect”? What strategies can they employ to optimize market demand while managing the costs associated with blockchain implementation and green investments? This paper aims to provide actionable insights for manufacturers differentiated by technology regarding their pricing and investment strategies.

Key Research Questions

To address these strategic considerations, we will explore the following questions:

1. What are the Nash equilibrium solutions under various blockchain technology adoption scenarios? What outcomes arise from endogenous game equilibrium?
2. How do the conditions for blockchain adoption differ among manufacturers with varying technological capabilities? What factors influence these conditions?
3. In what ways do different blockchain adoption models impact manufacturers’ pricing and green investment strategies?
4. How do varying consumer market structures influence manufacturers’ optimal decisions before and after adopting blockchain technology?

Methodology

To answer these questions, we will develop a duopoly game model focusing on the pricing and green investment strategies of technology-differentiated manufacturers in the context of blockchain technology. We will first analyze the Nash equilibrium solutions across different blockchain introduction modes. Next, we will investigate how consumer behavior characteristics affect manufacturers’ optimal decisions under various blockchain adoption scenarios, comparing the pricing and investment strategies of technologically advanced and disadvantaged manufacturers. Finally, we will validate our theoretical findings through numerical simulations.

Contributions to Existing Literature

This research offers two significant contributions to the existing body of literature:

1. We categorize consumers based on their sensitivity to blockchain technology and examine how the proportion of blockchain-sensitive consumers influences manufacturers’ optimal strategies.
2. We explore the technological differences among manufacturers, investigate the conditions under which different types adopt blockchain technology, and analyze the impact of various adoption models on pricing and green investment strategies.

Conclusion and Future Directions

The remainder of this paper is structured as follows: Section 2 reviews relevant literature; Section 3 outlines the problem and establishes the game models; Section 4 examines the optimal pricing and green investments of manufacturers under different blockchain adoption models; Section 5 discusses the strategy combinations of endogenous game equilibrium; Section 6 presents numerical simulations to illustrate and validate our theoretical conclusions; and Section 7 concludes with recommendations for future research.

Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.