Equilibrium blockchain adoption strategies for duopolistic competitive platforms with network effects

The emerging blockchain technology has created many novel applications for platform operations in the sharing economy. This study develops an analytical model to assess whether two traditional platforms should utilize private blockchains as an operational strategy, and how their decisions depend on the technology’s characteristics and market conditions. Results indicate that the difference in service quality between the two platforms plays a critical role in blockchain adoption decisions. Specifically, when the service quality difference is significant, the platform with high service quality should adopt blockchain technology, whereas the other platform should not. When the service quality difference is not significant, both platforms should make identical decisions. This study is the first to theoretically analyze price competition and blockchain adoption between two platforms with positive network effects, providing useful managerial implications for competitive platform operations of the sharing economy.