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Design of Blockchain and Strategic Financing Service under the Platform Economy

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  • Wu, Jianghua
  • Wang, Xin
  • He, Yuhong

Abstract

The capital constrains and uncertainties in supply disruptions faced by small and medium-sized suppliers pose critical challenges for the development of e-commerce platforms. In response, platforms have begun offering direct financing (PDF) to their suppliers alongside traditional bank credit financing (BCF). Within the private (consortium) blockchain, the platform and the supplier (and the bank) achieve consensus on financial smart contract, enabling the execution of flexible contracts tailored to suppliers’ risk profile. We develop a game-theoretic model to examine the terms of smart contracts in different blockchains and further investigate the platform's optimal blockchain design. We find that PDF serves to safeguard the platform's commission income from high-interest BCF. Our analysis reveals that PDF is more likely to be provided to a risky supplier within the consortium blockchain, contrasting with outcomes observed within the private blockchain. As a result, the platform and the supplier could reach win-win, or win-lose outcomes within the private blockchain; while within the consortium blockchain, they tend to result in win-win or lose-win outcomes. Such incentive conflict could potentially hinder blockchain adoption. Our findings further provide the managerial insights guiding the platform's blockchain design: adopting consortium blockchain under moderate market potential and low or high supplier's risk, and adopting private blockchain otherwise. Furthermore, we consider the supplier's endogenous effort on reducing risk, and numerically demonstrate that blockchain may encourage or discourage the supplier's effort. Our research complements previous studies by investigating the interaction between the PDF provision and blockchain structures under uncertain supply disruption risk.

Suggested Citation

  • Wu, Jianghua & Wang, Xin & He, Yuhong, 2025. "Design of Blockchain and Strategic Financing Service under the Platform Economy," Omega, Elsevier, vol. 131(C).
    • Handle: RePEc:eee:jomega:v:131:y:2025:i:c:s0305048324001658
    DOI: 10.1016/j.omega.2024.103200
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    References listed on IDEAS

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