To Adopt Blockchain or Not? A Game Theoretic Analysis of Profit and Environmental Impact

Lithium-ion battery (LIB) related companies can employ blockchain to record data used to assess the health status of LIBs and thus recycle decommissioned LIBs in an environmentally friendly and economic manner. However, whether blockchain adoption is helpful for the environment and company profitability remains controversial. To this end, we consider a dual-channel closed-loop supply chain consisting of a LIB supplier (LS), an outsourced-mode EV manufacturer (OM), and an integrated-mode EV manufacturer (IM), and analyze how blockchain adoption affects equilibrium decisions, and whether IM and LS should adopt blockchain for LIB production and recycling from the perspective of environmental impact and company profitability. First, we show that brand preference, the effect of blockchain operational cost disadvantage, and the effect of echelon utilization benefit advantage are the main factors affecting the equilibrium decisions. Second, we show that blockchain adoption is viable to mitigate the environmental impact of LIB production and recycling, provided that the energy savings from the echelon utilization method exceed a certain value. Third, we show that neither IM nor LS will adopt blockchain in the immature stage of blockchain technology, that IM will adopt blockchain but LS will not in the moderately mature stage of blockchain technology, and that both IM and LS will adopt blockchain in the mature stage of blockchain technology