The interplay between blockchain adoption and channel selection in combating counterfeits

This study explores the interplay between blockchain technology (BCT) adoption and channel selection in combating counterfeits and examines the impact of this interaction on consumer surplus (CS) and social welfare (SW). Firstly, analytical models are developed to examine four scenarios (with and without BCT adoption and two channel scenarios). Secondly, the impacts of BCT adoption and channel selection decisions on CS and SW are analyzed. Finally, we relax our assumptions to consider the presence of the dual-channel sales model, risk-averse consumers, and expert consumers. The main findings are as follows: (1) Genuine companies should sometimes sell through dual sales channels before adopting BCT; however, they should always sell through a single sales channel after adopting BCT. Furthermore, BCT changes the optimal single sales channel from the retailer channel to the direct sales channel when the proportion of deceptive counterfeits in the direct sales channel is relatively high. (2) Both consumers and the whole society will benefit from the deployment of BCT when all sales channels of a company are either less reliable or highly unreliable. (3) BCT is valuable in combating counterfeits, especially when the risk aversion level of consumers is not sufficiently low or the proportion of expert consumers is sufficiently low.