130 / 2024-04-21 15:23:38

Blockchain-Enabled Horizontal Capacity Sharing under Demand Uncertainty

capacity sharing,blockchain adoption,supply chain flexibility,capacity constraint,coopetition

Supply chain flexibility, especially volume flexibility, is usually seen as a key initiative to mitigate demand uncertainty. This study considers that two rival manufacturers with symmetrical capacity constraints can increase supply chain flexibility through cooperation, i.e., capacity sharing and information sharing. To ensure information symmetry and prevent from breaking contracts, manufacturers cooperate by adopting blockchain. By comparing the equilibrium solutions of the strategy manufacturers do not adopt blockchain and the two cooperation strategies, this study examines the conditions where manufacturers adopt blockchain for cooperation, the impact of capacity level on manufacturers’ decisions and profits, and the impact of blockchain adoption on consumer surplus and social welfare. The findings denote that the manufacturer’s blockchain adoption strategy depends on capacity level and demand uncertainty. Manufacturers adopt blockchain-enabled information sharing when the capacity level is large, while choose blockchain-enabled capacity sharing only when the capacity level is medium and demand uncertainty is not too small. In addition, capacity sharing is conducted at the high capacity-varying transfer price in the medium-low capacity, while at a low fixed transfer price in the medium-high capacity and even zero when demand uncertainty is sufficiently large. Secondly, a medium capacity level leads to a low transfer price and high transfer quantity, which results in the largest expected profit and the most significant advantage of capacity sharing. Finally, consumer surplus and social welfare can benefit from capacity sharing in most cases. However, setting transfer prices does not always harm consumer surplus and social welfare.