The new supply chain information sharing Renaissance through crypto valuation mechanism of digital assets

Abstract

It is well known that supply chains should leverage information sharing from stakeholders as a measure to drive business growth. However, the practice of information sharing for supply chain management has been fairly limited due to the high cost of meeting differential user needs, information-island from centralized storage, and inefficient information value capture. To address these concerns, we investigate a crypto-valuation mechanism of digital assets (DAs) inspired by a standard monopolistic screening model. Our model consists of a DAs provider with a unique cost structure of sharing DAs and users who experience participation costs. The DAs are digital replicas of physical assets (e.g., workforce, trucks, and cargo) in the supply chain. The provider produces DAs with maximum features (e.g., carbon emission, customer satisfaction, etc.) to give users differential feature access for set valuations (crypto-token payment). When the consumers experience participation costs, we find that the marginal sharing and participation costs determine the optimality of DAs versioning. By endogenizing the highest quality (or level of digitization), we find that an increase in the cost of delivering DAs results in every user getting access to fewer features. Interestingly, cost factors do not directly influence user coverage, i.e., costs do not determine who gets access to DAs. However, the provider’s decision to absorb a portion of user participation cost can contract the user coverage. Overall, this study contributes a novel valuation mechanism to the literature on blockchain adoption for information sharing in the supply chain. It also offers insights and recommendations based on critical parameters to guide supply chains that leverage the mechanism for business growth.