The interplay of blockchain and channel structure with consideration of cyber-security in a platform supply chain

Abstract

This paper investigates the application of blockchain technology and channel selection strategies, considering an e-commerce platform vulnerable to cyberattacks that can defend itself through either effort or blockchain technology, which enhances the efficiency of defensive effort and has a certain impact on consumers. Utilizing a Stackelberg game model, we analyze the situation where the manufacturer can not only wholesale products to the retailer selling on the platform, but may also choose to encroach by establishing a direct channel through the platform. Research finds that the manufacturer’s encroachment can incentivize the platform to increase its defensive effort, thereby expanding market demand. Consequently, the manufacturer increases the wholesale price after encroaching into the market, which worsens the double marginalization. Additionally, although blockchain can reduce the efficiency of increasing defensive effort, we find that due to consumers’ negative attitude towards blockchain, the platform may actually reduce its defensive effort after adopting blockchain. Furthermore, we discover that the negative impact of blockchain can be mitigated by the manufacturer’s encroachment. Finally, we find that within a certain range, the platform may use blockchain to promote manufacturer’s encroachment, while simultaneously, it may also forgo the use of blockchain to prevent encroachment. This suggests that when faced with cyberattacks, managers of e-commerce platforms can strategically design channel structure and utilize blockchain to defend against cyberattacks and secure profits.