Blockchain-facilitated quality traceability and pre-sale inspection: Influencing geographical indication supply chain contracts and farmer quality decisions

Abstract

Geographical Indications (GIs) are increasingly prominent in the global economy, offering market leverage and propelling agricultural development. However, concerns arise that GI producers prioritize short-term gains over long-term quality assurance, leading to moral hazards and quality degradation. The prevalence of free-riding behavior within GI supply chains poses a collective action dilemma, significantly challenging the management of product quality.

In this paper, we explore the integration of blockchain technology and quality inspections into GI supply chains as potential solutions for establishing reliable and effective quality management measures. We develop a two-tier model involving one retailer and two farmers to analyze the effects of quality inspection and blockchain-based traceability on product quality and the handling of substandard products. By assessing the optimal profits of retailers and farmers under various quality management models, we ascertain the strategy that achieves a Pareto-efficient improvements.

Our research investigates the efficacy of blockchain-facilitated traceability and pre-sale inspection in shaping supply chain contracts, influencing quality decisions, and augmenting the overall value addition of blockchain integration. Despite the effectiveness of quality inspections in defect prevention, they fail to bolster overall earnings when implemented in isolation. Although the synergistic application of inspection and traceability substantially boosts GI supply chain profitability, our findings reveal that it does not increase farmers’ income. Interestingly, farmers are unlikely to prefer a singular reliance on quality inspection. Nevertheless, under specific market conditions, the adoption of blockchain presents a mutually beneficial scenario for both farmers and retailers. Based on these insights, we provide theoretical and practical guidance for optimizing quality management strategies in GI supply chains.